Locus of control and other-regarding behavior: Experimental evidence from a large heterogeneous sample

This paper investigates the relationship between locus of control and other-regarding behavior in a large and heterogeneous sample of the French population. We relate locus of control with incentivized measures of other-regarding behavior in the dictator and ultimatum games. Participants with high internal locus of control offer comparatively less in situations with passive responders (dictator game) but tend to increase their offers when their counterparts have veto power (ultimatum game). Moreover, they appear better at anticipating responders’ behavior in the ultimatum game, which leads to offers with a higher probability of acceptance and higher expected payoff. Some results for the ultimatum game, however, are sensitive to model specification and sample composition. Our findings suggest that a high internal locus of control increases individuals’ ability to adapt to strategic and non-strategic settings.     

The impact of self-control depletion on social preferences in the ultimatum game

We study the interaction of different motives and decision processes in determining behavior in the ultimatum game. We rely on an ego-depletion manipulation which consumes self-control resources, thereby enhancing the influence of default reactions, or in psychological terms, automatic processes. Experimental results provide evidence that proposers make higher offers under ego depletion. Based on findings from a closely related dictator game study, which shows that depleted dictators give less than non-depleted ones, we discard the possibility that other-regarding concerns are the default mode. Instead, we conclude that depleted proposers offer more because of a strategic ‘fear of rejection’ of low offers, consistent with self-centered monetary concerns. For responders, ego depletion increases the likelihood to accept offers, in line with unconditional monetary concerns being more automatic than affect-influenced reactions to reject unfair offers.     

RAISING THE STAKES IN THE ULTIMATUM GAME: EXPERIMENTAL EVIDENCE FROM INDONESIA

The ultimatum game has generated considerable interest because experimental evidence strongly rejects the standard game-theoretic predictions. A limitation to this general result is the possibility that experimental results are an artifact of small stakes. Implementing the ultimatum game in Indonesia makes it possible to raise the stakes to three times the monthly expenditure of the average participant. Even with these sizable incentives, results do not uniformly approach the sub-game perfect, selfish outcomes. More specifically, responders become more willing to accept a given percentage offer at higher stakes, but proposer behavior is largely invariant to stake changes. ( JEL C91, C78)     

Personality preferences in laboratory economics experiments

Student volunteers at the U.S. Naval Academy (USNA) participated in one of the following one-shot games: a dictator game, an ultimatum game, a trust game, or a prisoner's dilemma game. We find limited support for the importance of personality type for explaining subjects’ decisions. With controls for personality preferences, we find little evidence of behavioral differences between males and females. Furthermore, we conclude that seniority breeds feelings of entitlement—seniors at USNA generally exhibited the least cooperative or other-regarding behavior.     

Dictator game variants with probabilistic (and cost-saving) payoffs: A systematic test

Driven by methodological concerns, theoretical considerations, and previous evidence, I systematically test the validity of common dictator game variants with probabilistic payoffs. Using a unified experimental framework, I include four approaches and compare them to a standard dictator game: involving fewer receivers than dictators, paying only some players, paying only some decisions, and role uncertainty. I also relate transfers in the dictator game variants to established complementary individual difference measures of prosociality: social value orientation, personal values, a donation to charity, and the Big Five personality factor agreeableness. My data shows that the standard dictator game presents the expected correlations with the complementary measures of prosociality. Involving fewer receivers yields comparably valid results. By contrast, when only some players or decisions are paid or, particularly, when subjects face role uncertainty, the expected associations with complementary prosociality measures are distorted. Under role uncertainty, generosity is also significantly biased upward. I conclude that the validity of dictator game outcomes is highly sensitive to the applied methods. Not all dictator game variants can be recommended for the valid measurement of social preferences.     

Fairness as a constraint on reciprocity: Playing simultaneously as dictator and trustee

The dictator and trust games are two common games used to identify the existence of social preferences. However, in many social interactions, individuals face the environments in both games simultaneously: for example we are often engaged in charitable donations to strangers, as well as reciprocal exchange with family members and colleagues. As giving in one game could be prioritised over giving in the other, it is important to have participants play both as a dictator in the dictator game and as a trustee in a trust game simultaneously. The results indicate that when the recipient in the dictator game is significantly poorer relative to the dictator, the dictator tends to return an amount to the trustor such that the trustor neither makes a loss nor profit from trusting. This suggests that the presence of a sufficiently strong incentive to make transfers as a dictator may completely crowd-out any monetary returns to trust.     

Freedom of choice in a social context: comparing game forms

In this paper, the set of outcomes of game forms is introduced as the relevant attribute for evaluating freedom of choice. These sets are defined as the cartesian product of every individual’s set of available options. It is argued that doing so is one way of taking into account social interactions when evaluating individual freedom. A set of axioms is introduced, each of which conveys some intuitions about how interactions affect freedom of choice, axioms by the mean of which two criteria, the Max and the MaxMin, are characterised for comparing game forms in terms of the freedom of choice they offer. These criteria are based, respectively, on the comparison of the best and the worst outcome the individual can reach in the game form.     

Gender differences in the ultimatum game

I explore the behavior of men and women in the ultimatum game. In one treatment, players remain mutually anonymous. In the second treatment, players'gender is common knowledge. Average offers made do not differ based on the gender of player 1. Offers are affected by the gender of player 2, with men attracting higher offers, particularly from female players 1. Players 2 of both genders choose a higher minimum acceptable offer when facing a female player 1. These patterns led to substantial differences in earnings. Such striking differences in expectations and decisions could impact salary negotiations and other real-world transactions.     

Buying a pig in a poke: An experimental study of unconditional veto power

We study an ultimatum experiment in which the responder does not know the offer when accepting or rejecting. Unconditional veto power leads to acceptances, although proposers are significantly greedier than in standard ultimatum games, and this is anticipated by responders. We also elicit responders’ willingness to pay for (un)conditional veto power. The bids reveal a large endowment effect.     

Knowing what I should, doing what I want: From selfishness to inequity aversion in young children’s sharing behavior

The social utility model suggests that people feel more satisfied with equal divisions of resources than from inequitable outcomes, even when the latter favors oneself. Research examining children’s behavior has shown that the tendency to share half of one’s endowment increases with age between the ages of 3 and 8. However, the satisfaction the children derive from their decisions (to share half of their endowments) has yet to be examined. I present two studies (using the dictator and ultimatum games) suggesting that young children (5-6 years old) are aware of the norms of fairness but choose to act selfishly and prefer not to share. Slightly older children aged 7-8 adopt these norms in their actual behavior but do not feel happier when they share half of their endowments than when they share less than half. Finally, true inequity aversion only appears at the ages of 9-10, when children not only give more, but they correspondingly also feel better when their endowments are equally divided.     

On competing rewards standards—an experimental study of ultimatum bargaining

In the tradition of earlier experimental studies, this paper introduces competing reward standards by letting parties bargain over the distribution of chips. The monetary equivalents of a chip for the bargaining parties can be equal (no competing rewards) or different (competing rewards). The ultimatum game is used as a tool to learn about reward standards in an asymmetric procedure. A major effect of different monetary chip equivalents is observed only when the proposer has a higher chip value. Results are compared to those reported in [Games Econ. Behav. 13 (1966) 100], who used a different experimental design.     

PORTFOLIO CHOICE AND RISK ATTITUDES: AN EXPERIMENT

Using financial incentives, we study how portfolio choice (how much to invest in a risky asset) depends on three well-known behavioral phenomena: ambiguity aversion, the illusion of control, and myopic loss aversion. We find evidence that these phenomena are present and test how the level of investment is affected by these motivations; at the same time, we investigate whether participants are willing to explicitly pay a small sum of money to indulge preferences for less ambiguity, more control, or more frequent feedback/opportunities to choose the investment level. First, the observed preference for "control" did not affect investment behavior and in fact disappeared when participants were asked to actually pay to gain more control. Second, while people were indeed willing to pay for less ambiguity, the level of ambiguity did not influence investment levels. Finally, participants were willing to pay to have more frequent feedback opportunities to change their portfolio, even though prior research has shown that people invest less in risky assets (and earn less) in this case . ( JEL B49, C91, D81, G11, G19)     

Economics students need not be greedy: Fairness and the ultimatum game

Following Adam Smith, conventional economics gives self-interest the primary role of all economic behavior. However, past experiments with the ultimatum game often produce outcomes inconsistent with this orthodox conception of ‘economic man.’ In our replication of the ultimatum experiment, students at a small, liberal arts college do not allocate monetary rewards in a self-interested manner, but rather their choices conform with the social norm of ‘fairness’ (i.e., a 50/50 split). Contrary to past research, we find that economic majors are less motivated by self-interest than other students.     

Ex-post blindness as excuse? The effect of information disclosure on giving

People passing by beggars without leaving a penny are not necessarily pure money-maximizers. In the world of sincere and dishonest recipients, some donors might anticipate the disutility they will suffer at the moment they realize their help is misdirected and reduce their willingness to donate to avoid these psychological costs. I employ a dictator game with ex-ante uncertainty about recipient’s endowment and requests from recipients to study how donors react to ex-post revelation of recipient’s type. I observe no difference in donations with and without ex-post information about recipient’s endowment. However, if donors could choose if they want to receive such information themselves, nearly a third of dictators choose to remain ignorant. Those dictators who choose to ex-post reveal the endowment of the recipient give significantly more.     

Endogenous agenda formation in three-person committees

This paper analyzes a 3-person voting game in which two or three players have the ability to choose alternatives to be considered. Once the set of possible alternatives and the structure of the voting procedure are known, the players can solve for the outcome. Thus, the actual choice over outcomes takes place in the choice of alternatives to be voted on, i.e., the agenda. An equilibrium to this agenda-formation game in shown to exist under different assumptions about the information relative to the order of the players in the voting game. Further, this equilibrium is computed and found to possess certain features which are attractive from a normative point of view.Prepared for delivery at the 1985 Annual Meeting of the American Political Science Association, The New Orleans Hilton, August 29–September 1, 1985. We would like to thank Richard McKelvey, Norman Schofield and two anonymous referees for valuable comments and suggestions. We retain responsibility for remaining errors.     

Risky choice in interpersonal context: Do people dare because they care?

This paper presents an experimental study investigating the interplay of individuals’ other-regarding preferences and individuals’ risk attitude. Participants (N = 120) had to make choices between a certain and risky payoff only for themselves (individual context) and choices in which the participants were paired with another randomly assigned participant who functioned as a passive recipient (interpersonal context). In the interpersonal context the risky option was beneficial for the other person while the certain option was not. Thus, the interpersonal choice context was an abstract representation of the incentive structure in helping situations, which yield risk only for the helper. Risky options in the interpersonal context yielded different payoff distributions, which allowed us to identify how considerations of fairness affect interpersonal risky choices. To assess other-regarding preferences, a dictator game was played. First we found that participants were generally less risk averse in the interpersonal choices; however, the degree of risk aversion was affected by the distribution of payoffs between decider and recipient. Furthermore, we found that changes of risk aversion in an interpersonal context could be predicted with the proposed splits in the dictator game.     

On Preference, Freedom and Diversity

We study the problem of ranking sets of options in terms of freedom of choice. We propose a framework in which both the diversity of the options and the preferences of the agent over the options do play a role. We formulate some axioms that reflect these two aspects of freedom and we study their logical implications. Two different criteria for ranking sets are characterized, which generalize some of the rankings proposed so far in the literature.     

Benford’s Law and Number Selection in Fixed-Odds Numbers Game

In fixed-odds numbers games, the prizes and the odds of winning are known at the time of placement of the wager. Both players and operators are subject to the vagaries of luck in such games. Most game operators limit their liability exposure by imposing a sales limit on the bets received for each bet type, at the risk of losing the rejected bets to the underground operators. This raises a question—how should the game operator set the appropriate sales limit? We argue that the choice of the sales limit is intimately related to the ways players select numbers to bet on in the games. There are ample empirical evidences suggesting that players do not choose all numbers with equal probability, but have a tendency to bet on (small) numbers that are closely related to events around them (e.g., birth dates, addresses, etc.). To the best of our knowledge, this is the first paper to quantify this phenomenon and examine its relation to the classical Benford’s law. We use this connection to develop a choice model, and propose a method to set the appropriate sales limit in these games.     

On the likelihood of dummy players in weighted majority games

When the number of players is small in a weighted majority voting game, it can occur that one of the players has no influence on the result of the vote, in spite of a strictly positive weight. Such a player is called a “dummy” player in game theory. The purpose of this paper is to investigate the conditions that give rise to such a phenomenon and to compute its likelihood. It is shown that the probability of having a dummy player is surprisingly high and some paradoxical results are observed.