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

Procedural Justicein Dictator Games

Rethinking the Fairness Hypothesis

Mikhael ShorVanderbilt University

September 2006

ESA29 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?


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


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


rej

m

Treatments

A

B

acc

(c-m , m ) (0 , 0)

m

A

(c-m , m )

Dictator Ultimatum


rej

m m

Treatments

A

(c-m , m )

A

A

B

acc

(c-m , m ) (0 , 0)

m m

A

(c-m , m )

A

B

( m , c-m )

Dictator with Role Choice Empowerment


rej

m m

Treatments

A

(c-m , m )

A

A

B

acc

(c-m , m ) (0 , 0)

m m

A

(c-m , m )

A

B

( m , c-m )

Dictator with Role Choice Empowerment


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


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


Results: Control Treatments

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 100

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 10

2.87 average 4.61

Dictator Ultimatum


Result 1

People care about procedural justice

Dictator with Role Choice: Of 54 subjects…

Empowerment:

Of 54 subjects…


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%


Result 2

Distributions are significantly more even in dictator games with procedural choice

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 100

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 10

DictatorWith Role

Choice

Empowerment

4.57 average 4.81


Average Offers by Game and Procedure Choice

Game Average Offer (std. dev)

Dictator 2.87

(2.26)

Dictator with Role Choice 4.57

(1.63)

Kept dictator role for self 4.59 (1.38)

Given dictator role by other 4.53 (2.12)

Empowerment 4.81

(1.85)

Gave power of rejection 5.30 (1.47)

Did not give power of rejection

4.05 (2.13)

Ultimatum 4.61 (1.59)




Dictator 2.87

(2.26)


(1.63)



Empowerment 4.81

(1.85)



4.05 (2.13)





Dictator 2.87

(2.26)


(1.63)



Empowerment 4.81

(1.85)



4.05 (2.13)



Result 3

Even self-empowered dictators are more generous

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 10

Self-appointed dictatorsDictator w/ Role Choice

Empowerment


Result 3

Even self-empowered dictators are more generous

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 10

— Dictator Game


Empowerment


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?


Result 4

The fairness hypothesis is alive and well.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 1 2 3 4 5 6 7 8 9 10


Empowerment

— Ultimatum Game


Latent Assumptions of the “Fairness Hypothesis” Differences between dictator and ultimatum games

Ultimatum Dictator Ultimatum Dictator

Utilitarianism + +Formalism

Cynicism

Tactics

Constant

+


Latent Assumptions of the “Fairness Hypothesis” Differences between dictator and ultimatum games


Utilitarianism + +Formalism

Cynicism

Tactics

Constant 0 0

+

=


Results: Justice Orientation

Differences between dictator and ultimatum games


Utilitarianism 0.798** 0.681*

Formalism -0.046 0.114

Cynicism 0.736*

Tactics -0.009

Constant 0.626 -2.213


Results: Justice Orientation

Differences between dictator and ultimatum games


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


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

Documents

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