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Procedural Justice in Dictator Games Rethinking the Fairness Hypothesis

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  1. Procedural Justicein Dictator GamesRethinking the Fairness Hypothesis Mikhael Shor Vanderbilt University 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. Inherited Literature • 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 • 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)

  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. Treatments • A • A • m • m • B (c-m , m ) • acc • rej (c-m , m ) (0 , 0) Dictator Ultimatum

  6. Treatments • A • A • A • A • A • B • m • m • m • m • B (c-m , m ) ( m , c-m ) (c-m , m ) • acc • rej (c-m , m ) (0 , 0) Dictator with Role Choice Empowerment

  7. Treatments • A • A • A • A • A • B • m • m • m • m • B (c-m , m ) ( m , c-m ) (c-m , m ) • acc • rej (c-m , m ) (0 , 0) Dictator with Role Choice Empowerment

  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. 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. Results: Control Treatments Dictator Ultimatum 2.87 average 4.61

  11. Result 1 People care about procedural justice • Dictator with Role Choice: • Of 54 subjects… • Empowerment: • Of 54 subjects…

  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. Result 2 Distributions are significantly more even in dictator games with procedural choice Empowerment Dictator With Role Choice 4.57 average 4.81

  14. Average Offers by Game and Procedure Choice

  15. Average Offers by Game and Procedure Choice

  16. Average Offers by Game and Procedure Choice

  17. Result 3 Even self-empowered dictators are more generous Self-appointed dictators Dictator w/ Role Choice Empowerment

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

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

  21. Latent Assumptions of the “Fairness Hypothesis” • Differences between dictator and ultimatum games +

  22. Latent Assumptions of the “Fairness Hypothesis” • Differences between dictator and ultimatum games = +

  23. Results: Justice Orientation • Differences between dictator and ultimatum games

  24. Results: Justice Orientation • Differences between dictator and ultimatum games

  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