Loss Aversion in Dictator Games

Anthony Khaiat, Camille Burton, Gabe Moos, and Kimberly Stafford, University of Chicago

Dictator Games consist of two players, an allocator and a recipient, in which the allocator governs the distribution of an endowment between themselves and the recipient. Widely replicated Dictator Game studies by Kahneman et al. (1986) and Kuang et al. (2006), among others, reveal that altruistic behavior among allocators can be influenced by variables that regulate models of human inequity aversion. This study presents a randomized, modified Dictator Game experiment with loss aversion and transparency manipulations. We find that loss aversion provides no significant effect on a Dictator’s willingness to give, yet transparency between players nudges allocators to be more generous. Additionally, we find that individuals believe they are more altruistic than others under loss aversion coupled with transparency.

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