Description
In the dictator game, the first player, "the proposer", determines an allocation (split) of some endowment (such as a cash prize). The second player, "the responder", simply receives the remainder of the endowment left by the proposer. The responder's role is entirely passive (the responder has no strategic input into the outcome of the game). As a result, the dictator game is not formally a proper game (as the term is used in game theory). To be a proper game, every player's outcome must depend on the actions of at least some others. Since the proposer's outcome depends only on his own actions, this situation is one of decision theory. Despite this formal point, the dictator game is used in the game theory literature as a degenerate 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 (acting as dictators) 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. These results appear robust: for example, Henrich, et al. discovered in a wide cross cultural study that proposers do allocate a non-zero share of the endowment to the responder.
If these experiments appropriately reflect individuals' preferences outside of the laboratory, these results appear to demonstrate that either:
- Proposers fail to maximize their own expected utility,
- Proposers' utility functions may include non-tangible harms they incur (for example self-image or anticipated negative views of others in society), or
- Proposers' 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. This suggests that dictator game behavior is, in fact, altruism instead of the failure of optimizing behavior. Other experiments have shown a relationship between political participation and dictator game giving, suggesting that it may be an externally valid indicator of concern for the well-being of others.
Read more about this topic: Dictator Game
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