Dictator game

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The dictator game is a very simple game in experimental economics, similar to the ultimatum game. Experimental results in the dictator game have often been cited as a conclusive rebuttal of the rationally self-interested individual (homo economicus) model of economic behavior.^[1] Although this conclusion is controversial.^[2]

In the dictator game, the first player "the proposer" determines an allocation (split) of some endowment (such as a cash prize). The "responder" in this case simply receives the remainder of the endowment not allocated by the proposer to himself. The responder's role is entirely passive (he has no strategic input into the outcome of the game).

This game has been used to test the homo economicus model of individual behavior: if individuals were only concerned with their own economic well being, proposers would allocate the entire good to themselves and give nothing to the responder. Experimental results have indicated that individuals often allocate money to the responders, reducing the amount of money they receive.^[3] These results appear robust, Henrich, et al. discovered in a wide cross cultural study that proposers do allocate a non-zero share of the endowment to the responder.^[1]

If these experiments appropriately reflect individuals' preferences outside of the laboratory, these results appears to demonstrate that either:

1. Proposers fail to maximize their own expected utility, or
2. Proposer's utility functions include benefits received by others^[1].

[edit] Challenges

Some authors have suggested that giving in the dictator game does not entail that individuals wish to maximize other's benefit (altruism). Instead they suggest that individuals have some negative utility associated with being seen as greedy, and are avoiding this judgment by the experimenter. Some experiments have been performed to test this hypothesis with mixed results.^[4]

Further experiments testing experimental effects have been performed. Bardsley has performed experiments where individuals are given the opportunity to give money, give nothing, or take money from the respondent.^[2] In these cases individuals consistently give less (close to zero). Bardsley suggests two interpretations for these results. First, it may be that the range of options cues experimental subjects to use different reasoning paterns. "Subjects might perceive dictator games as being about giving, since they can either do nothing or give, and so ask themselves how much to give. Whilst the taking game... might appear to be about taking for analogous reasons, so subjects ask themselves how much to take."^[2] Second, subjects behavior may be effected by a kind of framing effect. What a subject considers to be an appropriately kind behavior depends on the range of behaviors available. In the taking game, the range includes worse alternatives than the dictator game, and as a result giving less appears equally kind.

[edit] References

1. ^ ^{a b} Henrich, Joseph, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr, and Herbert Gintis (2004) Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. Oxford University Press.
2. ^ ^{a b c} Bardsley, Nicholas. (2005) "Altruism or artifact? A Note on Dictator Game Giving" CeDEx Discussion Paper No. 2005-10.
3. ^ For example, Bolton, Katok, Zwick 1998, "Dictator game giving: Rules of fairness versus acts of kindness" International Journal of Game Theory 27:2 (Article Abstract). This paper includes a review of dictator games going back to 1994 (Forsythe R, Horowitz JL, Savin NE, Sefton M, 1994 Fairness in simple bargaining experiments. in Games and Economic Behavior). For an overview see Camerer, Colin (2003) Behavioral Game Theory Princeton Unversity Press, Princeton.
4. ^ Hoffman Elizabeth, McCabe Kevin, Shachat Keith and Smith Vernon (1994) "Preferences, Property Rights, and Anonymity in Bargaining Games" Games and Economic Behavior 7(3): 346-380 and Bolton, Gary E., Elena Katok, and Rami Zwick (1998) "[http://lema.smeal.psu.edu/katok/45K5E4WC73MJF1WQ.pdf Dictator game giving: Rules of fairness versus acts of kindness]" International Journal of Game Theory 27:269-299.

[edit] Related research

Haley, K. and Fessler, D. (2005). Nobody’s watching? Subtle cues affect generosity in an anonymous economic game, Evolution and Human Behaviour, 26. 245-256.

(The research above concludes that people tend to be more generous if there is a picture of a pair of eyes watching them)

view	Topics in game theory
Definitions	Normal form game · Extensive form game · Cooperative game · Information set · Preference
Equilibrium concepts	Nash equilibrium · Subgame perfection · Bayes-Nash · Trembling hand · Correlated equilibrium · Sequential equilibrium · Quasi-perfect equilibrium · Evolutionarily stable strategy
Strategies	Dominant strategies · Mixed strategy · Grim trigger · Tit for Tat
Classes of games	Symmetric game · Perfect information · Dynamic game · Repeated game · Signaling game · Cheap talk · Zero-sum game · Mechanism design
Games	Prisoner's dilemma · Coordination game · Chicken · Battle of the sexes · Stag hunt · Matching pennies · Ultimatum game · Minority game · Rock, Paper, Scissors · Pirate game · Dictator game
Theorems	Minimax theorem · Purification theorems · Folk theorem · Revelation principle · Arrow's Theorem
Related topics	Mathematics · Economics · Behavioral economics · Evolutionary game theory · Population genetics · Behavioral ecology · Adaptive dynamics · List of game theorists