The Game
There is a growing interest in the “Dictator Game” (DG) because of the game’s original gaming mechanics and strategic choices. An experimental paradigm where one person (the dictator) is given a quantity of money and must choose how much to distribute with another anonymous participant (the recipient). I can think of no better place to conduct experiments than the DG. When two people are asked to divide a sum of money provided by the researcher, there are no other players involved; therefore, it is hard to call it “gaming” (say, 10 euros, for simplicity). “dictator” has the power to decide how many shares each player gets. They need to accept the other player’s proposal (Ben-Ner et al., 2004). The DG is commonly referred to as the latest “anomalous” game in the experimental literature.
Standard economic theory dictates that a dictator should keep all of the cake and offer nothing in exchange for the services of the other players, which is based on reason and self-interest. As we’ll show, it is a different story in the lab, where individuals are paid to play the DG for a living. The rationality assumption is rarely questioned in a basic set like the dictator game. It’s ludicrous to assume that players don’t understand the game’s logic if there aren’t any significant disruptions. As a result, the mainstream economic model’s selfishness postulate is its most serious flaw (Cason and Mui, 1998). Since the DG’s release, most of the conversation has focused on what it can teach us about human psychology and social dynamics.
Secondly, some of the reasons for economists’ scepticism of the DG’s intentions must be identified. Even though experimental economics was partially created to oppose this idea, theory-centricity affected its growth relentlessly. According to many experimental economists, their work is primarily focused on testing theories rather than conducting research. If theories are tested, there’s nothing wrong with it: focusing on explicitly stated predictions that are rigorously derived from a set of transparent postulates provides advantages that other sciences (such as psychology) do not. On the other hand, experimental economists and psychologists conducted the first DG experiments during a time when their primary goal was to prove the mainstream economic theory.
Evaluations were made on the dictator game’s replication and statistical properties. A $5 pie and a 2 x 2 pay design were used in the first trial in April or September (pay or no pay). The pie in the pay condition was raised to $10 in a single test. Everyone took part in a game with an anonymous partner. Room A housed the dictators, while Room B housed the rewards. In-room A, a person can choose how much of this each person receives based on the written instructions. The game’s remuneration was also given to those eligible for it. Using both paid and unpaid researchers, the study discovered that the distribution of dictator donations across time (from April to September) could be duplicated.
Standard Economic Theory vs. Experimental Results
Pay and no-pay circumstances were denied a similar allotment. Acceptance of the assumption that the proportion of donations for $5 and $10 pay games was the same. 79 % of participants left money in the $10 game, while 20% left half. A total of $3, or 30% of the revenue, was distributed. As a result, Forsythe et al. (1994) show that dictators can create both bizarre and repeatable distributions.
Researchers Forsythe et al. (1994) claim in their introduction that their findings show a yearning for justice among the public. Finding out what was driving this seeming need for ‘fairness’ was our primary purpose in conducting non-repeated ultimatums and dictator games. During the trial, four different methods of treating the dictator were used. All contestants played a single dictator game with a $10 pie. In addition to their salary from the game, they got a show-up fee. One participant was assigned the role of a vendor, and the second participant was given the buyer’s part in the random entitlement-exchange procedure.
The vendor sets the selling PRICE, and the client is compelled to buy at that price. The vendor will receive $8 if they enter PRICE = $8, whereas the buyer will receive $2.” The working hypothesis was that the previous paragraph of instructions about money being ‘provisionally provided’ could account for some dictators donating in the Forsythe et al. (1994) experiment. They argue that this means neither bargainer owns the money entirely; it belongs to both. The dictator may donate less money because the seller (dictator) is more sure of his property rights.
Hoffman et al. (1994) substituted random role selection with contest selection to enhance this sense of entitlement. Winners of a current events quiz were told they would “win the right to sell.” In terms of design, the treatment was similar to exchange. The hypothesis of anonymity was tested directly in three treatments: The creation of this method was unique in several ways. Players were identified by their room, like Forsythe et al. (1994). The instructions clarified that one person would be paid $10 to supervise the trial. Each dictator received ten one-dollar bills and ten blank pages of paper in an envelope. Two more dictators each received twenty paper slips. The dictators determined the number of dollar notes (if any) and paper clips in the envelope. The total value of the dollar bills and paper slips must be ten dollars. The remainder of the dollar bills and paper are then pocketed.” Dictators placed the envelope in a community collection box in secret.
Literature Review
The researchers compare Double Blind to their past therapy and Forsythe et al. (1994) treatment in their article. It was discovered that the dictator distribution for Double-Blind 1 differed from those published by Forsythe et al. (1994) or exchange (the last two tests were statistically the same). Double-Blind 1, on the other hand, was statistically indistinguishable from Contest. Forsythe et al. (1994) and exchange were more autocratic than Contest and Double-Blind 1. In Double Blind 1, dictators left nothing, and only about 6% of the participants left half. Following this, the researchers point out that the procedures utilized in [Double Blind 1] differ significantly from those used in previous studies. Which of these actions is required?” Then they did Double Blind 2, which was different from Double-Blind 1 in two ways. The experimenter first took on the role of subject monitor. Second, all envelopes that did not contain money were discarded. Indeed, the dictator who ordered Double Blind 2’s distribution was similar to the dictator who ordered Double Blind 1’s distribution. Hoffman et al. (1994).
No difference was found between observed laboratory play and experimenter observation of the ultimatum game in terms of the anonymity hypothesis’ explanatory power. There were three of them in total. Subjects performed the simplified ultimatum game in the Cardinal Ultimatum cell. Participants in the Zero-Knowledge cell played the same game without the presence of observers (The procedure inducing experimenter anonymity is quite involved, and a description is not necessary for our present purposes). The three cells were designed and built the same way: The participants were randomly divided into ten first movers and ten-second movers. The first and second movers were matched in the ten trials, resulting in ten observations (games) per trial. A and B are the two players, and there are four similar boxes in the game. Each box represents a payment. Choose one of the boxes below.” For each of the ten games, the subjects were rewarded.
Cognitive dissonance arises as a result of these investigations. They are, without a doubt, very comparable games. In Forsythe et al. (1994), only 20% of dictators leave the bare minimum (zero), while dictators refuse to go more than the bare minimum in Bolton and Zwick’s impunity game, whether it is 5% or 45 % of the pie. Because the experimenter observed both treatments, the anonymity hypothesis is fallacious. What is the rationale for this? Hoffman et al. (1994) Double-Blind 1 found that one-third of participants left a positive amount even in subject-experimenter anonymity.
Robert Forsythe, Joel L. Horowitz, N. E. Savin, and Martin Sefton (1994)
According to Dana et al. (2007), their findings do not support an alternate explanation for authoritarian behaviour. When one dictator isn’t accountable for the other’s remuneration, there are fewer fair options in a dictator game where dictators choose between $(6, 1) and $(5, 5). Before making a final decision, it is possible to resolve the ambiguity by comparing the reward in one form to the prize in another. It is a rarity that anyone takes on the task since most individuals are content to pay $6 instead. If they don’t know about the other person’s payment, they can blame the less favourable outcome on chance. Transparency improves generosity in the game of dictator. As evidenced by Experiments 1-3, which show that tyrants are to blame for taking,
Reading 1 suggests that the data presented by Dana et al. (2007) may not be entirely transparent as claimed. Non-harmful actions can impact the message the environment delivers about proper behaviour. Experiments should be designed to interpret the results in various ways. Following the “range-frequency” model of Parducci and Wedell (1986), the rate at which an option is selected relies on its position and frequency within the choice set. Participants’ perceptions of kindness may differ depending on the extent of activity, even if the choices they choose on their choice sheets are the same. The third experiment is something to ponder. As much as £2 per hour can be charged for counselling.
The distribution in treatment 2 has been translated from right to left into this distribution. This is opposed to societal preferences. It follows Rabin’s (1993) reciprocity paradigm, which states that compassion is judged in contrast to a reference point. In practice, action is neutral if it delivers a partner a reward that is halfway between the agent’s maximum and minimum. Kindness can be measured in the resources it invests (unkind).
The experimental design approach systematically and objectively researches to increase precision and make precise conclusions about a hypothesis statement. It’s also referred to as a practical approach. The goal is to determine the impact of a factor or independent variable on one or more dependent variables.
Between-subjects studies are often used to assess therapeutic efficacy. A treatment is any action that aims to impact people’s behaviour positively. It covers psychotherapies and medical treatments for psychological disorders and interventions to improve learning, conserve, eliminate prejudice, and other aspects of human behaviour. Participants are allocated to either a treatment condition or a control condition at random to see if a treatment is beneficial. Therapy is helpful if it results in less depression, faster learning, higher resource conservation, and less bias stated by treatment participants than control participants.
Elizabeth Hoffman, Kevin McCabe, Keith Shachat, and Vernon Smith (1994)
We experimented with three treatments in a between-subjects design. Treatment A represented the investment game, whereas Treatments B and C represented the trust game, with B representing the first phase and C representing the second. Treatments B and C represent the investment game. Because Treatment B was the dictator game, the second mover could not repay any of the triple sum offered by the first mover. The reciprocal control dictator game was the definitive treatment C, identical to the investment game but did not provide the first movers. A $10 endowment was granted to each second-place mover, while the first-place mover received an amount equivalent to their treatment A investments.
Afterwards, second movers in treatment A received additional cash payments corresponding to their threefold increase in income. In a table distributed to the participants, it was shown that a “second mover’s” additional funds were directly proportional to the endowment of the anonymously matched first mover. 32 pairs of people participated in the experiment. Two instances occurred in which the second movers retained the entire $15 they received from the first movers and returned nothing, six cases in which the first movers transferred precisely half of their endowments to the second movers, four instances in which the second movers returned $5, one example in which the second movers returned $3 for treatment A. First-time donors from 26 of the 32 first-time donors sent in money (Pillutla and Murnighan, 2003).
The definition of a trustworthy person can be answered by comparing the therapy methods utilized in A and B. Another 17 second-movers reported good statistics, indicating that the amount of money given and received is becoming increasingly linked. Is this a two-way street? Therapy A and treatment C can be compared to determine the answer to this question. Treatment A’s first movers sent an average of $5.97, whereas treatment B’s first movers sent $3.63, according to the two treatments. There is an example of this in illustration one. A high level of trust is evident in the investment game, as this study demonstrates. Compared to none of the 32-second movers in Treatment A, 13 out of 32 participants in Treatment C returned the money to their primary donors. Second-movers received an average of $4.94 in treatment A but only $2.06 in treatment C. As a result, this data collection contains evidence of new preferences (such as altruism and reciprocity). Results from the study reveal that the literature’s subgame perfect equilibria don’t hold when players are expected to have self-interested desires. This experiment proved altruism and other factors such as trust, preferences, and reciprocity (Murnighan et al., 2001).
Gary E Bolton and Rami Zwick (1995)
When it comes to establishing distributional preferences, our experiment’s outcomes are not conclusive. To demonstrate predictive validity, distributional preferences must be assessed in various social contexts, the scores must be correlated with other measures (proving convergent validity), and the scores must be distinguished from other variables such as beliefs to show predictive values validity (establishing divergent validity). Confounded measures of distributional preferences (those that consider both choices and beliefs) may be better at predicting cooperative behavior because beliefs are an effective predictor. Consequently, it is imperative to explore SVO’s unique ability to anticipate collective behaviours in addition to preferences. Experimental designs beyond simple role assignment and incentivization protocols aren’t relevant to the current research because they looked at how decomposed games remove strategic interdependence from proper games while determining if social contexts influence resource allocation task choice behaviour.
Challenges include expenses associated with coordinating schedules, organizing meetings, communicating with other group members and integrating their ideas are known as coordination costs. While each of these responsibilities is brief, the cumulative effect is significant. When one or more members of a group delegate most or all of the work to others, this is known as free riding. A lack of action on free-riding tends to damage the long-term drivers of the hardworking researcher.
Reference List
Ben-Ner, A., Putterman, L., Kong, F. and Magan, D., 2004. Reciprocity in a two-part dictator game. Journal of Economic Behavior & Organization, 53(3), pp.333-352.
Bolton, G.E. and Zwick, R., 1995. Anonymity versus punishment in ultimatum bargaining. Games and Economic Behavior, 10(1), pp.95-121.
Cason, T.N. and Mui, V.L., 1998. Social influence in the sequential dictator game. Journal of mathematical psychology, 42(2-3), pp.248-265.
Dana, J., Weber, R.A. and Kuang, J.X., 2007. Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness. Economic Theory, 33(1), pp.67-80.
Forsythe, R., Horowitz, J.L., Savin, N.E. and Sefton, M., 1994. Fairness in simple bargaining experiments. Games and Economic Behavior, 6(3), pp.347-369.
Hoffman, E., McCabe, K., Shachat, K. and Smith, V., 1994. Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior, 7(3), pp.346-380.
Murnighan, J.K., Oesch, J.M. and Pillutla, M., 2001. Player types and self-impression management in dictatorship games: Two experiments. Games and Economic Behavior, 37(2), pp.388-414.
Parducci, A. and Wedell, D.H., 1986. The category effect with rating scales: number of categories, number of stimuli, and method of presentation. Journal of Experimental Psychology: Human Perception and Performance, 12(4), p.496.
Pillutla, M.M. and Murnighan, J.K., 2003. Fairness in bargaining. Social Justice Research, 16(3), pp.241-262.
Rabin, M., 1993. Incorporating fairness into game theory and economics. The American Economic Review, pp.1281-1302.
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