Dictator game

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The dictator game is a experimental paradigm in psychology, similar to the ultimatum game, first developed by Daniel Kahneman and colleagues.[1] Experimental results offer evidence against the rationally self-interested individual (sometimes called the homo economicus) concept of economic behavior,[2] though precisely what to conclude from the evidence is controversial.[3]

Since the dictator's outcome depends only on his own actions, the dictator game is not formally a game (as the term is used in game theory) but is one of decision theory. To be a game, a player's outcome must depend on the actions of at least one other. However, the dictator game is used in game theory literature as a degenerate game.[citation needed]

Description[edit]

In the dictator game, the first player, "the dictator", determines how to split an endowment (such as a cash prize) between himself and the second player. The second player, "the recipient", simply receives the remainder of the endowment left by the dictator. The recipient's role is entirely passive and has no input into the outcome of the game.[citation needed]

Application[edit]

The dictator game has been used to test the homo economicus model of individual behavior: if individuals were only concerned with how much money they receive, dictators would allocate the entire good to themselves and give nothing to the recipient.[citation needed]

Adults' and children's behavior[edit]

Experimental results have indicated that adults often allocate money to the recipients, reducing the amount of money the dictator himself receives.[4] These results appear robust: for example, Henrich, et al. discovered in a wide cross-cultural study that dictators do allocate a non-zero share of the endowment to the recipient.[5] In modified versions of the dictator game, children also tend to allocate some of a resource to a recipient and most five-year-olds share at least half of their goods.[6]

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

  1. Dictators' utility functions include only money that they receive and dictators fail to maximize it.
  2. Dictators' utility functions may include non-tangible harms they incur (for example self-image or anticipated negative views of others in society), or
  3. Dictators' utility functions may include benefits received by others.

Additional experiments have shown that subjects maintain a high degree of consistency across multiple versions of the dictator game in which the cost of giving varies.[7] This suggests that dictator game behavior is well approximated by a model in which dictators maximize utility functions that include benefits received by others, that is, subjects are increasing their utility when they pass money to the recipients. The latter implies they are maximizing a utility function that incorporates recipient's welfare and not only their own welfare. This is the core of the "other-regarding" preferences. A number of experiments have shown donations are substantially larger when the dictators are aware of the recipient's need of the money.[8][9] Other experiments have shown a relationship between political participation, social integration, and dictator game giving, suggesting that it may be an externally valid indicator of concern for the well-being of others.[10][11][12][13] Recent papers have shown that experimental subjects in the lab do not behave differently than ordinary people outside the lab regarding altruism.[14] A recent pair of studies suggests that behavior in this game is heritable.[15][16]

Challenges[edit]

The idea that the highly mixed results of the Dictator game prove or disprove rationality in economics is not widely accepted. Results offer both support of the classical assumptions and notable exception which have led to improved holistic economic models of behavior. Some authors have suggested that giving in the dictator game does not entail that individuals wish to maximize others' 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.[17][18]

Variants[edit]

The Trust Game is similar to the dictator game, but with an added first step. In the trust game, one participant first decides how much of an endowment to give to the second participant. The first player is also informed that whatever he sends will be tripled by the experimenter. Then the second participant (now acting as a dictator) decides how much of this increased endowment to allocate to the first participant. Thus the dictator's partner must decide how much of the initial endowment to trust with the dictator (in the hopes of receiving the same amount or more in return). The experiments rarely end in the subgame perfect Nash equilibrium of "no trust". A pair of studies published in 2008 of identical and fraternal twins in the USA and Sweden suggests that behavior in this game is heritable.[19]

See also[edit]

References[edit]

  1. ^ Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1986-01-01). "Fairness and the Assumptions of Economics". The Journal of Business. 59 (4): S285–S300. JSTOR 2352761. 
  2. ^ Levitt, Steven and Stephen Dubner (2009). Superfreakonomics New York: William Morrow.
  3. ^ Bardsley, Nicholas (2005-04-01). "Altruism or Artefact? A Note on Dictator Game Giving". The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. 
  4. ^ 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 University Press, Princeton.
  5. ^ 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.
  6. ^ Gummerum, Michaela; Hanoch, Yaniv; Keller, Monika; Parsons, Katie; Hummel, Alegra (2010-02-01). "Preschoolers’ allocations in the dictator game: The role of moral emotions". Journal of Economic Psychology. 31 (1): 25–34. doi:10.1016/j.joep.2009.09.002. 
  7. ^ Andreoni, James; Miller, John (2002-03-01). "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism". Econometrica. 70 (2): 737–753. ISSN 1468-0262. doi:10.1111/1468-0262.00302. 
  8. ^ Eckel, Catherine C.; Grossman, Philip J. (1996-01-01). "Altruism in Anonymous Dictator Games". Rochester, NY: Social Science Research Network. SSRN 1883604Freely accessible. 
  9. ^ Brañas-Garza, Pablo (2006-07-01). "Poverty in dictator games: Awakening solidarity". Journal of Economic Behavior & Organization. 60 (3): 306–320. doi:10.1016/j.jebo.2004.10.005. 
  10. ^ Fowler, James H.; Kam, Cindy D. (2007-08-01). "Beyond the Self: Social Identity, Altruism, and Political Participation". The Journal of Politics. 69 (3): 813–827. ISSN 0022-3816. doi:10.1111/j.1468-2508.2007.00577.x. 
  11. ^ Fowler, James H. (2006-08-01). "Altruism and Turnout". The Journal of Politics. 68 (3): 674–683. ISSN 0022-3816. doi:10.1111/j.1468-2508.2006.00453.x. 
  12. ^ Leider, Stephen; Möbius, Markus M.; Rosenblat, Tanya; Do, Quoc-Anh (2009-11-01). "Directed Altruism and Enforced Reciprocity in Social Networks". The Quarterly Journal of Economics. 124 (4): 1815–1851. ISSN 0033-5533. doi:10.1162/qjec.2009.124.4.1815. 
  13. ^ Brañas-Garza, Pablo; Cobo-Reyes, Ramón; Espinosa, María Paz; Jiménez, Natalia; Kovářík, Jaromír; Ponti, Giovanni (2010-07-01). "Altruism and social integration". Games and Economic Behavior. 69 (2): 249–257. doi:10.1016/j.geb.2009.10.014. 
  14. ^ Exadaktylos, Filippos; Espín, Antonio M.; Brañas-Garza, Pablo (2013-02-14). "Experimental subjects are not different". Scientific Reports. 3. ISSN 2045-2322. PMC 3572448Freely accessible. PMID 23429162. doi:10.1038/srep01213. 
  15. ^ Cesarini, David; Dawes, Christopher T.; Johannesson, Magnus; Lichtenstein, Paul; Wallace, Björn (2009-01-01). "Genetic Variation in Preferences for Giving and Risk Taking". The Quarterly Journal of Economics. 124 (2): 809–842. JSTOR 40506244. 
  16. ^ Brañas-Garza, Pablo; Kovářík, Jaromír; Neyse, Levent (2013-04-10). "Second-to-Fourth Digit Ratio Has a Non-Monotonic Impact on Altruism". PLOS ONE. 8 (4): e60419. ISSN 1932-6203. PMC 3622687Freely accessible. PMID 23593214. doi:10.1371/journal.pone.0060419. 
  17. ^ Hoffman, Elizabeth; McCabe, Kevin; Shachat, Keith; Smith, Vernon (1994-11-01). "Preferences, Property Rights, and Anonymity in Bargaining Games". Games and Economic Behavior. 7 (3): 346–380. doi:10.1006/game.1994.1056. 
  18. ^ Bolton, Gary E.; Katok, Elena; Zwick, Rami. "Dictator game giving: Rules of fairness versus acts of kindness". International Journal of Game Theory. 27 (2): 269–299. ISSN 0020-7276. doi:10.1007/s001820050072. 
  19. ^ Cesarini, David; Christopher T. Dawes; James H. Fowler; Magnus Johannesson; Paul Lichtenstein; Björn Wallace (11 March 2008). "Heritability of cooperative behavior in the trust game" (PDF). Proceedings of the National Academy of Sciences. 105 (10): 3721–3726. PMC 2268795Freely accessible. PMID 18316737. doi:10.1073/pnas.0710069105. 

Further reading[edit]

  • Haley, K.; D. Fessler (2005). "Nobody's watching? Subtle cues affect generosity in an anonymous economic game". Evolution and Human Behaviour. 26 (3): 245–256. doi:10.1016/j.evolhumbehav.2005.01.002.  Concludes that people tend to be more generous if there is a picture of a pair of eyes watching them.
  • Engel, C. (2011). "Dictator Games: A Meta Study". Experimental Economics. 14 (4): 583–610. doi:10.1007/s10683-011-9283-7. 
  • For a recent review of the dictator game in experiments see Angela A. Stanton: Evolving Economics: Synthesis