The dictator game is a popular experimental instrument in social psychology and economics, a derivative of the ultimatum game. The term "game" is a misnomer because it captures a decision by a single player: to send money to another or not. The results – most players choose to send money – evidence the role of fairness and norms in economic behavior, and undermine the assumption of narrow self-interest.
Description
In the dictator game, the first player, "the dictator", determines how to split an endowment between himself and the second player. The dictator's action space is complete and therefore is at his own will to determine the endowment, which means that the recipient has no influence over the outcome of the game.
Application
While the initial game as developed by Daniel Kahneman involved third-party punishment, successors later simplified the ultimatum game to remove the punishment portion, resulting in the form now known as the dictator game. Based on homo economicus principle, one would expect players to maximize their own payoff; however, it has been shown that human populations are more “benevolent than homo economicus” and therefore rarely do the majority give nothing to the recipient.
Experiments
In 1988 a group of researchers at the University of Iowa conducted a controlled experiment to evaluate the homo economicus model of behavior with groups of voluntarily recruited economics, accounting, and business students. These experimental results contradict the homo economicus model, suggesting that players in the dictator role take fairness and potential adverse consequences into account when making decisions about how much utility to give the recipient. A later study in neuroscience further challenged the homo economicus model, suggesting that various cognitive differences among humans affect decision-making processes, and thus ideas of fairness. Experimental results have indicated that adults often allocate money to the recipients, reducing the amount of money the dictator receives. 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. 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. A number of studies have examined psychological framing of the dictator game with a version called "taking" in which the player "takes" resources from the recipient's predetermined endowment, rather than choosing the amount to "give". Some studies show no effect between male and female players, but one 2017 study reported a difference between male and female players in the taking frame. In 2016, Bhogal et al. conducted a study to evaluate the effects of perceived attractiveness on decision-making behavior and altruism in the standard dictator game, testing theories that altruism may serve as a courtship display. This study found no relationship between attractiveness and altruism. If these experiments appropriately reflect individuals' preferences outside of the laboratory, these results appear to demonstrate that either:
Dictators' utility functions include only money that they receive and dictators fail to maximize it.
Dictators' utility functions may include non-tangible harms they incur, or
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. 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. 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. Recent papers have shown that experimental subjects in the lab do not behave differently than ordinary people outside the lab regarding altruism. Studies have suggested that behavior in this game is heritable.
Challenges
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 holisticeconomic models of behavior. Some authors have suggested that giving in the dictator game does not entail that individuals wish to maximize others' benefit. 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.
Variants
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 they send will be tripled by the experimenter. Then the second participant 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. 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 US and Sweden suggests that behavior in this game is heritable. A variation of the dictator game called “Taking Game”, emerged from sociological experiments conducted in 2003, in which the dictator decides how much utility to “take” from the recipient's pre-determined endowment. This dictator game variation was designed to evaluate the idea of greed, rather than the idea of fairness or altruism generally evaluated with the standard dictator game model, also referred to as the “Giving Game”.
