Scenario 12.1 describes research findings discussed in the following review article: Cameron, C. C., & Thaler, R. H. (1995). Anomalies: Ultimatums, dictators, and manners. Journal of Economic Perspectives, 9(19), 209–219. In the ultimatum game, two participants are assigned to be either the “Divider” or the “Decider” by a coin flip. The Divider is given a sum of money, such as $10, and is instructed to offer some nonzero portion of it to the Decider. If the Decider accepts, she gets to keep what was offered, and the Divider keeps the rest. If the Decider rejects the deal, both players get nothing. Both players are made aware of all of these rules and then the game begins. Under these conditions, Dividers usually offer a little less than $5, and Deciders usually accept this amount. If Dividers offer less, Deciders often reject and both players get nothing. A similar game is termed the dictator game. Players are randomly assigned to be either the “Allocator” or the “Receiver.” The Allocator is given a sum of money and makes a decision about how much money she would like to give the Receiver, who must accept this result. Allocators in this game usually offer some money to the Receiver but typically less than they offer the Dividers in the ultimatum game. (Scenario 12.1) Consider the real-world observation that lottery winners tend to give away more of their money to friends and family than self-made millionaires give to theirs. Using the dictator game, which strategy is the BEST way to model this phenomenon in the laboratory? a) Study differences in Allocator behavior when the sum of money ranges from small to large. b) Compare allocations to Receivers who are either friends or strangers in a game in which the Allocator's own money is used. c) Compare typical performance with a modification in which the winner of a game of skill gets to be the Allocator.
Scenario 12.1 describes research findings discussed in the following review article:
Cameron, C. C., & Thaler, R. H. (1995). Anomalies: Ultimatums, dictators, and manners. Journal of Economic Perspectives, 9(19), 209–219.
In the ultimatum game, two participants are assigned to be either the “Divider” or the “Decider” by a coin flip. The Divider is given a sum of money, such as $10, and is instructed to offer some nonzero portion of it to the Decider. If the Decider accepts, she gets to keep what was offered, and the Divider keeps the rest. If the Decider rejects the deal, both players get nothing. Both players are made aware of all of these rules and then the game begins. Under these conditions, Dividers usually offer a little less than $5, and Deciders usually accept this amount. If Dividers offer less, Deciders often reject and both players get nothing. A similar game is termed the dictator game. Players are randomly assigned to be either the “Allocator” or the “Receiver.” The Allocator is given a sum of money and makes a decision about how much money she would like to give the Receiver, who must accept this result. Allocators in this game usually offer some money to the Receiver but typically less than they offer the Dividers in the ultimatum game.
(Scenario 12.1) Consider the real-world observation that lottery winners tend to give away more of their money to friends and family than self-made millionaires give to theirs. Using the dictator game, which strategy is the BEST way to model this phenomenon in the laboratory?
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