Dictator game

Definition

The dictator game is a simple economic experiment used to measure altruism and fairness in individuals. In this game, one player, the 'dictator,' has the power to decide how to divide a certain amount of resources or money between themselves and another player, who has no say in the decision. This setup allows researchers to observe the extent to which individuals are willing to share or act selfishly, providing insights into human behavior in social and economic contexts.

5 Must Know Facts For Your Next Test

1. In the dictator game, the dictator's decision is made without any consequences for themselves if they choose to share or keep all the resources.
2. Research has shown that many dictators do choose to share a portion of their endowment, which challenges traditional economic assumptions of self-interest.
3. The game highlights the impact of social norms and expectations on individual behavior, showing that people often act more generously than predicted.
4. Variations of the dictator game have been conducted across different cultures, revealing significant differences in sharing behavior based on cultural norms.
5. The dictator game serves as a foundational experiment in behavioral economics, helping researchers understand motivations behind prosocial behavior and resource allocation.

Review Questions

• How does the structure of the dictator game reveal insights about human altruism and self-interest?
  • The structure of the dictator game allows researchers to see how individuals behave when given complete control over resource distribution without fear of retaliation or social judgment. This setup reveals that many participants choose to share their resources, indicating that factors like altruism and social preferences can influence decisions beyond mere self-interest. It highlights that people often consider fairness and empathy when making economic choices.
• In what ways does the ultimatum game differ from the dictator game, and what implications does this have for understanding negotiation in economic interactions?
  • The ultimatum game differs from the dictator game by allowing the second player to accept or reject the proposed division of resources, adding an element of negotiation. This change introduces considerations of fairness since rejecting an unfair offer results in both players receiving nothing. The implications are significant, as it shows how negotiation processes and perceived fairness can impact economic outcomes, highlighting that not all economic interactions are purely transactional.
• Evaluate how findings from the dictator game have contributed to a broader understanding of behavioral economics and human decision-making.
  • Findings from the dictator game have greatly enriched the field of behavioral economics by demonstrating that people's decisions are often influenced by social preferences rather than solely by rational self-interest. These experiments show that individuals may prioritize fairness, kindness, or social norms when allocating resources. This understanding challenges traditional economic models and encourages researchers to consider psychological factors in predicting economic behavior, leading to a more nuanced view of human decision-making.

Related terms

ultimatum game: A variation of the dictator game where the second player can accept or reject the proposed division, which introduces negotiation and fairness considerations.

altruism: The selfless concern for the well-being of others, often studied in behavioral economics to understand how individuals make decisions that affect others.

behavioral economics: A field that combines insights from psychology and economics to study how people make decisions and how they are influenced by cognitive biases.