Dictator game

The dictator game is a very simple game in experimental economics, similar to the ultimatum 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 themself. The responder's role is entirely passive (they have 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. However, Henrich et al (2004) discovered in a wide cross cultural study^[1] that proposers do allocate a non-zero share of the endowment to the responder. (This 2004 study was an extension of earlier developments^[2] in the dictator and impunity games).

This result 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^[3].

However, other explanations have been offered, such as the anonymity hypothesis, which claim that the experiment is not correctly designed to test for "altruistic" behaviour, and that the presence of the experimenter causes the proposer to avoid the appearance of "greed".^[4]

Notes

1. ^ 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. ^ For example, Bolton, Katok, Zwick 1998, Dictator game giving: Rules of fairness versus acts of kindness in International Journal of Game Theory, Volume 27, Number 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).
3. ^ For example, the model of "inequity aversion" proposed by Ernst Fehr of the Henrich et al. study above: This model assigns personal disutility to an uneven split for equal work, sometimes called "guilt".
4. ^ See Bolton et al. page 270.