The Rules: In the game, two people interact anonymously. One of them is randomly designated as the “dictator.” It is his job to split an amount of money that is put up for that purpose by the researcher running the game. A typical amount is $10. The defining feature of the game is that the dictator can dictate whatever split he prefers. It could be to keep all the money for himself. It could be to give all the money to the other player. It could be to split it in any other possible way, such as $8.67 for himself and $1.33 for the other person.

Because the game is fully anonymous, the dictator doesn’t have to worry about retaliation by the other person. He can get away with being as selfish as he wants.

a. Do people playing the dictator game show only self-interested behavior?

b. How much divergence is there in the splits given by dictators to the other player?

c. Evaluate the following statement. “We shouldn’t generalize from what people do in the ultimatum game because $10 is a trivial amount of money. When larger amounts of money are on the line, people will act differently.”