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Procedural Justice in Dictator Games Rethinking the Fairness Hypothesis Mikhael Shor Vanderbilt University September 2006.

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Presentation on theme: "Procedural Justice in Dictator Games Rethinking the Fairness Hypothesis Mikhael Shor Vanderbilt University September 2006."— Presentation transcript:

1 Procedural Justice in Dictator Games Rethinking the Fairness Hypothesis Mikhael Shor Vanderbilt University September 2006

2 ESA 29 September 2006 2 Motivation Economists recognizing value of distributive justice. In many situations, how decisions are made is as important as what decisions are made. The “fairness hypothesis” assumes only distributional concerns. People have inherent value for “voice” or decision-making authority?

3 ESA 29 September 2006 3 Inherited Literature Abbink, et. al (2001) Andreoni, Castillo & Petrie (2003) Armantier (2006) Ben-Ner, Kong & Putterman (2004). Ben-Ner, et. al (2004). Bereby-Meyer & Niederle (2005) Blount (1995) Bohnet & Frey (1999) Bolton, Brandts & Ockenfels (2005) Bolton & Zwick (1995) Bolton, Zwick & Katok (1998) Brandts and Solà (2001) Brandstatter & Güth (2000) Camerer & Thaler (1995) Cameron (1999) Carter & McAloon (1996) Cason & Mui (1997) Costa-Gomes & Zauner (1997) Croson (1996) Eckel & Grossman (1992,1996,1998) Eckel & Gilles (1997) Ensminger (2003) Falk, Fehr & Fischbacher (2003) Forsythe, et. al (1994) Frohlich, Oppenheimer & Kurki (2004) Frohlich, Oppenheimer & Moore (2001) Gale, Binmore & Samuelson (1993) Gowdy, Iorgulescu & Onyeiwu (2003) Guth (1995,1997) Guth & Huck (1997) Guth, Ockenfels & Tietz (1990) Güth, Schmidt & Sutter (2003) Güth, Schmittberger & Schwarze (1982) Guth & Tietz (1986,1990) Güth & Van Damme (1998) Henrich (2000) Henrich, et. al (2001) Hoffman, et. al (1994). Hoffman, McCabe & Smith. (1996) Kahneman, Knetsch & Thaler (1986) Kagel, Kim & Moser (1996) Kagel & Wolfe (2001) Kirchsteiger (1994) Knez & Camerer (1995) Kravitz & Gunto (1992) Larrick & Blount (1997) Meyer (1992) Mitzkewitz & Nagel (1993) Muller (2001) Nelson (2002) Nowak, Page & Sigmund (2000) Ochs & Roth (1989) Oosterbeek, Sloof & Kuilen (2003) Paciotti & Hadley (2003) Rapoport, Sundali & Potter (1992) Riedl & Vyrastekova (2003) Roth, et. al (1991) Ruffle (1998) Schmidt (2004) Schmitt, et. al (2006) Schotter, Weiss & Zapater (1996) Sefton (1992) Slonim & Roth (1998) Solnick (2001) Solnick & Schweitzer (1999) Straub & Murnighan (1992) Suleiman & Ramzi (1996] Thaler (1988) Weber, Camerer & Knez (2004) Weg, Eythan & Smith (1992) Winter & Zamir (2005) Your Name Here

4 ESA 29 September 2006 4 Inherited Literature Intentionality matters  Is an equal split available?  Is the proposer empowered with choice? (Falk, Fehr, and Fischbacher, 2001; Güth, Huck, and Muller, 2001; Brandts and Sola, 2001; Blount, 1995; Nelson, 2002) A fair procedure may proxy for a fair allocation  Bolton, Brandts, and Ockenfels  Outcome fair a priori but always unfair ex post Different view of procedural justice:  Make procedures endogenous  Allow one player the power to involve others Goal: measure inherent value of procedural justice  Apart from distributive and strategic concerns

5 ESA 29 September 2006 5  rej mm Treatments AA BB  acc (c-m, m ) (0, 0) mm AA (c-m, m ) Dictator Ultimatum

6 ESA 29 September 2006 6  rej mm mm Treatments AA (c-m, m ) AA AA BB  acc (c-m, m ) (0, 0) mm mm AA (c-m, m ) AA BB ( m, c-m ) Dictator with Role Choice Empowerment

7 ESA 29 September 2006 7  rej mm mm Treatments AA (c-m, m ) AA AA BB  acc (c-m, m ) (0, 0) mm mm AA (c-m, m ) AA BB ( m, c-m ) Dictator with Role Choice Empowerment

8 ESA 29 September 2006 8 Hypotheses Procedural justice matters  People will give up dictator power to empower other player Will refocus thoughts on distributive justice  Why ought dictators be fair?  Modified dictator games will see higher offers than “standard” dictator game Fairness hypothesis is not rejected  If “fairness” considers both distributive and procedural issues

9 ESA 29 September 2006 9 Experimental Design 472 subjects randomly assigned to a treatment Recruited online (eLab)  Mean age: 38  U.S. residents: 45%  College graduates: 50% Amount: $10 Procedural choice was common knowledge Surveys:  Justice orientation:utilitarianism and formalism  Machiavellianism:cynicism and manipulative tactics

10 ESA 29 September 2006 10 Results: Control Treatments 2.87 average 4.61 DictatorUltimatum

11 ESA 29 September 2006 11 Result 1 People care about procedural justice  Dictator with Role Choice: Of 54 subjects…  Empowerment: Of 54 subjects…

12 ESA 29 September 2006 12 Result 1 People care about procedural justice  Dictator with Role Choice: Of 54 subjects… 17 chose the other player to be the dictator 31%  Empowerment: Of 54 subjects… 33 gave the other player the ability to reject 61%

13 ESA 29 September 2006 13 Result 2 Distributions are significantly more even in dictator games with procedural choice Dictator With Role Choice Empowerment 4.57 average 4.81

14 ESA 29 September 2006 14 Average Offers by Game and Procedure Choice GameAverage Offer (std. dev) Dictator2.87 (2.26) Dictator with Role Choice4.57 (1.63) Kept dictator role for self4.59 (1.38) Given dictator role by other4.53 (2.12) Empowerment4.81 (1.85) Gave power of rejection5.30 (1.47) Did not give power of rejection4.05 (2.13) Ultimatum4.61 (1.59)

15 ESA 29 September 2006 15 Average Offers by Game and Procedure Choice GameAverage Offer (std. dev) Dictator2.87 (2.26) Dictator with Role Choice4.57 (1.63) Kept dictator role for self4.59 (1.38) Given dictator role by other4.53 (2.12) Empowerment4.81 (1.85) Gave power of rejection5.30 (1.47) Did not give power of rejection4.05 (2.13) Ultimatum4.61 (1.59)

16 ESA 29 September 2006 16 Average Offers by Game and Procedure Choice GameAverage Offer (std. dev) Dictator2.87 (2.26) Dictator with Role Choice4.57 (1.63) Kept dictator role for self4.59 (1.38) Given dictator role by other4.53 (2.12) Empowerment4.81 (1.85) Gave power of rejection5.30 (1.47) Did not give power of rejection4.05 (2.13) Ultimatum4.61 (1.59)

17 ESA 29 September 2006 17 Result 3 Even self-empowered dictators are more generous Self-appointed dictators Dictator w/ Role Choice Empowerment

18 ESA 29 September 2006 18 Result 3 Even self-empowered dictators are more generous — Dictator Game Self-appointed dictators Dictator w/ Role Choice Empowerment

19 ESA 29 September 2006 19 The Fairness Hypothesis “If nontrivial offers are due solely to proposers’ concerns with fairness, the distribution will be the same in the two [Ult. And Dict.] games.”  Forsythe, Horowitz, Savin, and Sefton (1994) Fairness: procedural and distributive Stringent test: Will offers among self-empowered dictators be similar to ultimatum offers?

20 ESA 29 September 2006 20 Result 4 The fairness hypothesis is alive and well. Self-appointed dictators Dictator w/ Role Choice Empowerment — Ultimatum Game

21 ESA 29 September 2006 21 Latent Assumptions of the “Fairness Hypothesis” Differences between dictator and ultimatum games Ultimatum DictatorUltimatumDictator Utilitarianism ++ Formalism Cynicism Tactics Constant +

22 ESA 29 September 2006 22 Latent Assumptions of the “Fairness Hypothesis” Differences between dictator and ultimatum games Ultimatum DictatorUltimatumDictator Utilitarianism ++ Formalism Cynicism Tactics Constant 00 + =

23 ESA 29 September 2006 23 Results: Justice Orientation Differences between dictator and ultimatum games Ultimatum DictatorUltimatumDictator Utilitarianism 0.798** 0.681* Formalism -0.046 0.114 Cynicism 0.736* Tactics -0.009 Constant 0.626 -2.213

24 ESA 29 September 2006 24 Results: Justice Orientation Differences between dictator and ultimatum games Ultimatum DictatorUltimatumDictator Utilitarianism 0.798** -0.378 0.681* -0.317 Formalism -0.046 1.533** 0.114 1.264* Cynicism 0.736* 0.419 Tactics -0.009 -0.704 Constant 0.626 -4.957 -2.213 -2.889

25 ESA 29 September 2006 25 Summary Ultimatum game does reflect both distributional and strategic concerns Dictator game does not reflect distributional concerns  The reason for earlier rejections of the fairness hypothesis? Being fair, “procedurally,” important and distinct from allocation fairness

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