Question

Consider the field experiment with politicians that we discussed in the lecture. The experiment is based on a modified dictator game. In Treatment 1 (i.e. T1), nature plays with high probability (equal to 0.8) and randomly assigns the endowment either to the politician-dictator or to the recipient. The politician--dictator plays with complementary probability (and knows, when making a decision, that this decision will be implemented); in contrast, a recipient who receives zero (or the full endowment), will not know whether the dictator or nature is responsible. In Treatment 2 (i.e. T2), the probability that nature intervenes is very low (equal to 0.1). Final results are published and seen by all participants in the room.

Suppose a politician-dictator wants to keep 90% of the given endowment and give 10% of the endowment to the recipient. She knows there is a norm of equal-sharing and not giving 50% would cost her a social image loss. Is she still able to give 10% of the endowment without revealing her identity to anyone in the experiment?

	a.	No, the experimenter can identify her later.
	b.	Yes, she has to show her chosen allocation to her recipient.
	c.	None of the above.
	d.	No, as the results are published at the end and any given-amount other than zero and full-endowment will be identified by everybody in the room.
	e.	Yes, she can as she writes the intended allocation in the decision sheet in private where only her private number is written which is not known to anybody.

Answer 1

The politician-dictator will have to write her choice in a piece of paper and give it privately to the experimenter. The experimenter posts the results on the board for everyone to see. So, since it is an anonymous result, no one knows who has given what allocation. The recipients just know who has received what.

If there is not zero or full endowment, it will be possible to identify that it has come from a politican-dictator, but it will not be possible to identify who has given it. So if it is an anonymous result, (politician and recipient do not know each other) the the correct option will be Yes, she can as she writes the intended allocation in the decision sheet in private where only her private number is written which is not known to anybody.

However, if the pairs are public knowledge (which politician is paired with which recipient), then the correct option will be No, as the results are published at the end and any given-amount other than zero and full-endowment will be identified by everybody in the room.

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