Questions: Ultimatum and Dictator Games

Question 1

The dictator game eliminates the strategic motive for generosity present in the ultimatum game. Why is this methodologically important?

• A. It makes the game simpler to explain to participants
• B. It isolates pure fairness/altruism motives from strategic fear of rejection — any giving in the dictator game must reflect genuine other-regarding preferences
• C. It tests whether people can do basic arithmetic
• D. It eliminates all experimental demand effects

Answer: (B)

In the ultimatum game, generous offers could be strategically motivated — the proposer offers fairly not because they care about fairness but because they fear rejection. The dictator game eliminates this strategic concern by removing the responder's ability to reject. Any positive transfer by the dictator must reflect some form of other-regarding preference — altruism, fairness norms, guilt aversion, or inequality aversion. The fact that dictators still give substantial amounts (mean ~25%) is strong evidence against pure self-interest.

Question 2

Rejection of low offers in the ultimatum game is irrational because the responder receives nothing instead of a small positive amount.

• T. True
• F. False

Answer: False

Calling rejection 'irrational' assumes that the responder's only goal is to maximize their own monetary payoff. If the responder's utility function includes a fairness component — disutility from accepting an unfair division or utility from punishing unfair behavior — then rejection can be perfectly rational given those preferences. The responder is paying a material cost to express disapproval, enforce a fairness norm, or reduce inequality. From a social preferences perspective, the utility of punishment exceeds the disutility of losing the money.

Question 3

What did Henrich et al.'s cross-cultural study of the ultimatum game reveal about the universality of fairness behavior?

Model answer: Henrich et al. (2001) played the ultimatum game across 15 small-scale societies worldwide and found substantial cultural variation. Mean offers ranged from 26% (Machiguenga) to 58% (Lamelara). Offers were higher in societies with greater market integration (more experience with anonymous exchange) and greater dependence on cooperation. This suggests that while some fairness concern may be universal, its expression and magnitude are shaped by cultural norms and institutional environments.

The cross-cultural variation challenges both the pure self-interest prediction (offers were always above the minimum) and the idea that a specific fairness norm (e.g., 50/50 splits) is universal. Instead, the data suggest that market participation and cooperative institutions cultivate stronger norms of fairness in anonymous exchanges. The study remains one of the most important contributions to understanding the interplay between culture and economic behavior.