Historical Background
The SVO construct has its history in the study of interdependent decision making, i.e. strategic interactions between two or more people. The advent of Game theory in the 1940s provided a formal language for describing and analyzing situations of interdependence based on utility theory. As a simplifying assumption for analyzing strategic interactions, it was generally presumed that people only consider their own outcomes when making decisions in interdependent situations, rather than taking into account the interaction partners' outcomes as well. However, the study of human behavior in social dilemma situations, such as the Prisoner's dilemma, revealed that some people do in fact appear to have concerns for others.
In the Prisoner's dilemma, participants are asked to take the role of two criminals. In this situation, they are to pretend that they are a pair of criminals being interrogated by detectives in separate rooms. Both participants are being offered a deal and have two options. That is, the participant may remain silent or confess and implicate his or her partner. However, if both participants choose to remain silent, they will be set free. I both participants confess they will receive a moderate sentence. Conversely, if one participant remains silent while the other confesses, the person who confesses will receive a minimal sentence while the person who remained silent (and was implicated by their partner) will receive a maximum sentence. Thus, participants have to make the decision to cooperate with or compete with their partner.
When used in the lab, the dynamics of this situation are stimulated as participants play for points or for money. Participants are given one of two choices, labeled option C or D. Option C would be the cooperative choice and if both participants choose to be cooperative then they will both earn points or money. On the other hand, Option D is the competitive choice. If just one participants chooses option D, that participant will earn points or money while the other player will lose money. However, if both participant pick D, then both of them will lose money. In addition to displaying participant's social value orientations, it also displays the dynamics of a mixed-motives situation.
From behavior in strategic situations it is not possible, though, to infer peoples' motives, i.e. the joint outcome they would choose if they alone could determine it. The reason is that behavior in a strategic situation is always a function of both peoples' preferences about joint outcomes and their beliefs about the intentions and behavior of their interaction partners.
In an attempt to assess peoples' preferences over joint outcomes alone, disentangled from their beliefs about the other persons' behavior, David M. Messick and Charles G. McClintock in 1968 devised what has become known as the decomposed game technique. Basically, any task where one decision maker can alone determine which one out of at least two own-other resource allocation options will be realized is a decomposed game (also often referred to as dictator game, especially in economics, where it is often implemented as a constant-sum situation).
By observing which own-other resource allocation a person chooses in a decomposed game, it is possible to infer that person's preferences over own-other resource allocations, i.e. social value orientation. Since there is no other person making a decision that affects the joint outcome, there is no interdependence, and therefore a potential effect of beliefs on behavior is ruled out.
To give an example, consider two options, A and B. If you choose option A, you will receive $100, and another (unknown) person will receive $10. If you choose option B, you will receive $85, and the other (unknown) person will also receive $85. This is a decomposed game. If a person chooses option B, we can infer that this person does not only consider the outcome for the self when making a decision, but also takes into account the outcome for the other.
Read more about this topic: Social Value Orientations
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