Dictator game

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

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) 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.

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.

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.

Experimental results have indicated that adults often allocate money to the recipients, reducing the amount of money the dictator himself 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.

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

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. A recent pair of studies suggests that behavior in this game is heritable.

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