The dictator game is an experimental paradigm in psychology and economic theory, similar to the ultimatum game, which was first developed by Daniel Kahneman and colleagues. To be a game, each player’s outcome must depend on the actions of at least one other. The dictator’s action space is complete and therefore is at his own will to determine the endowment, which means that the recipient has no influence over the outcome of the game. While the initial game as developed by Daniel Kahneman involved third-party punishment, successors later simplified the ultimatum game to remove the punishment portion, resulting in the game van party now known as the dictator game.
In 1988 a group of researchers at the University of Iowa conducted a controlled experiment to evaluate the homo economicus model of behavior with groups of voluntarily recruited economics, accounting, and business students. These experimental results contradict the homo economicus model, suggesting that players in the dictator role take fairness and potential adverse consequences into account when making decisions about how much utility to give 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. A number of studies have examined psychological framing of the dictator game with a version called “taking” in which the player “takes” resources from the recipient’s per-determined endowment, rather than choosing the amount to “give”.
This study found no relationship between attractiveness and altruism. Dictators’ utility functions include only money that they receive and dictators fail to maximize it. Dictators’ utility functions may include benefits received by others. 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 idea that the highly mixed results of the dictator game prove or disprove rationality in economics is not widely accepted. Results offer both support of the classical assumptions and notable exception which have led to improved holistic economic models of behavior.
The Trust Game is similar to the dictator game, but with an added first step. In the trust game, one participant first decides how much of an endowment to give to the second participant. The first player is also informed that whatever he sends will be tripled by the experimenter. Fairness and the Assumptions of Economics”. A Note on Dictator Game Giving”. The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.