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Shared Experience and Third-Party Redistribution

Eastern Economic Journal volume 45, pages 446–463 (2019)Cite this article

Abstract

Using a three-player dictator-game experiment, we find that similar performance during a shared experience with a real-effort task causes a redistributor to privilege the stakeholder who performed similarly. We generate the shared experience by varying whether a third-party decision maker and a stakeholder acquire money through an effortful activity or through random selection of a ticket. Our results have implications for how perceptions of one’s own self-determination and social connectedness based on perceived similarities affect redistributive preferences.

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Notes

  1. The word-search grid (shown in “Appendix B”) contains 342 letters and includes thirty medical words (e.g. apf, myasthenia, kinesalgia, glossdynia and phago).

  2. Decision makers were given an initial sheet with two sets of four hypothetical situations. Upon completion, the monitor collected these sheets and gave them to the experimenter, who corrected any errors. The corrected forms were then returned with another form that listed four more hypothetical situations and required the decision makers to provide the final earnings of each sender, receiver and decision maker. Any decision maker who made a mistake on this second questionnaire would have been excluded from the analysis. All decision makers, however, answered the second questionnaire correctly.

  3. Senders and receivers were given a questionnaire that provided one set of four hypothetical situations and required them to record the final earnings of each sender, receiver and decision maker. If mistakes were made in the table, then the expectation was excluded from the analysis.

  4. Results do not substantively change under a generalized linear model that uses the proportion of the sender’s money that is redistributed (bounded between 0 and 1) as the dependent variable. In the GLM specification that mirrors the third specification of Table 4, the coefficient on Both Earn X Difference equals 0.057 (p = 0.034). Additionally, results and associated significance levels do not substantively change when these regression specifications use amount sent (rather than percent sent) and control for the Sender’s stakes. When an interaction between earnedDM-givenS and the differences variable is added to specification 3 of Table 4, the effect of this interaction is negative, indicating that redistribution in the treatment when only the decision maker earns decreases as the difference between the sender’s amount of money and the decision maker’s amount of money grows. Moreover, when variables that account for decision makers’ amounts of money or whether decision makers get more money than senders are either jointly or separately included in the third specification of Table 4, results do not substantively change and these added variables are not statistically significant (p > 0.41 whenever separately or jointly included).

  5. Results do not substantively change when these expectations are included.

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Acknowledgements

We want to credit NSF Grant # 0820076 for its support. We also want to thank anonymous referees for their comments on earlier drafts of the manuscript. No one but we bear responsibility for any mistakes.

Author information

Authors and Affiliations

  1. Economics Department, Connecticut College, 270 Mohegan Ave., New London, CT, 06320, USA

    David Chavanne

  2. Department of Economics, George Mason University, Fairfax, VA, USA

    Kevin A. McCabe

  3. Department of Economics, Trinity University, San Antonio, TX, USA

    Maria Pia Paganelli

Authors
  1. David Chavanne
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  2. Kevin A. McCabe
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  3. Maria Pia Paganelli
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Corresponding author

Correspondence to David Chavanne.

Appendices

Appendix A: Instructions

Welcome to today’s experiment. Now that we have started it is important that you do not talk or look around at other peoples’ desks. Your decisions are private and we respect that privacy. If at any time you have a clarifying question, raise your hand and someone will come over to help you. However, we cannot give advice on what decisions you should make. That’s up to you. You’re the one making the money.

Read the instructions carefully. At the end of the instructions, you will be given a questionnaire to test your understanding of them.

You have drawn an ID letter. For privacy, you will only be known by this ID letter during the experiment.

In this experiment, there are three roles: sender, decision maker and receiver. Four of you have been randomly selected to be senders, four have been randomly selected to be decision makers, and four have been randomly selected to be receivers. Each decision maker will be randomly matched with a sender, and each sender will be randomly matched with a receiver. Senders, decision makers and receivers will not know with whom they are paired. To preserve privacy, senders, decision makers and receivers will be sitting in different rooms.

If you have drawn the letter A, B, C or D, you will be a sender.

If you have drawn the letter E, F, G or H, you will be a decision maker.

If you have drawn the letter I, K, L or N, you will be a receiver.

Please keep your ticket as you will need to show it to get your payoff.

If you have drawn the letter M, you will be the monitor for today’s experiment. The monitor’s role is to insure the instructions are followed as stated.

Sender’s Task

[*earnedS: If you are a sender, you will be given a word-search task. Please make sure that you write your ID letter on the appropriate line. You will have 7 min to find as many words as you can. You will earn $2 for every word that you find. At the end of the 7 min, someone will collect the word-search sheets and bring your money back to you in an envelope. The money will be given to you in $1 bills. Once you get the envelope and examine its contents, you will then put all of the $1 bills in a basket.]

[*-givenS: If you are a sender, you will draw a ticket from a basket. Please make sure that you write your ID letter on the appropriate line. Each ticket will have an amount, in dollars, written on it. You will be given the amount of money that is written on your ticket. After everyone makes their draws, someone will collect the tickets and bring your money back to you in an envelope. The money will be given to you in $1 bills. Once you get the envelope and examine its contents, you will then put all of the $1 bills in a basket.]

Decision Maker’s Decision Task

If you are a decision maker, you will be asked to make only one decision: to choose how many of the $1 bills, if any, you want the sender to send to the receiver with whom she/he is randomly paired. You will make this decision by filling out a form that will be given to you in an envelope. After you make your decision, you will put the form back in the envelope. Once all decisions are made, the envelopes will be collected.

Decision Maker’s Payoff

[earnedDM-*: If you are a decision maker, you will be given a word-search task prior to making your decision. Please make sure that you write your ID letter on the appropriate line. You will have 7 min to find as many words as you can. You will earn $2 for every word that you find.

  • Your payoff = $2 * (number of words you find)

At the end of the 7 min, someone will collect the word-search sheets. Your payoff will be paid to you at the conclusion of the experiment; it will not be affected by the decision that you make.]

[givenDM-*: If you are a decision maker, you will draw a ticket from a basket prior to making your decision. Please make sure that you write your ID letter on the appropriate line. Each ticket has an amount, in dollars, written on it. You will be given the amount of money that is written on your ticket.

  • Your payoff = amount written on the randomly chosen ticket

After you draw your ticket, someone will collect it. Your payoff will be paid to you at the conclusion of the experiment; it will not be affected by the decision that you make.]

Receiver’s Payoff

If you are a receiver, you will receive an envelope containing the amount of money that the decision maker had the sender send to you.

  • Your payoff = amount sent

For example, if the decision maker has the sender send $4, then you will receive an envelope containing $4.

  • Your payoff = $4

Or if the decision maker has the sender send $16, then you will receive an envelope containing $16.

  • Your payoff = $16

Sender’s Payoff

If you are a sender, you will be given back the money that is left over after your paired Receiver receives her/his payoff.

  • [*-earnedS: Your payoff = $2 * (number of words you find) − amount sent

For example, if you find 10 words and earn $2 * 10 = $20, and if the decision maker has you send $4, you will have $16 left over. Your total payoff will equal the $16 left over.

  • Your payoff = $16

Or, if you find 10 words and earn $2 * 10 = $20, and if the decision maker has you send $16, you will have $4 left over. Your total payoff will equal the $4 left over.

  • Your payoff = $4]

  • [*givenS: Your payoff = amount on the ticket − amount sent

For example, if your ticket says that you are to be given $20, and if the decision maker has you send $4, you will have $16 left over. Your total payoff will equal the $16 left over.

  • Your payoff = $16

Or, if your ticket says that you are to be given $20, and if the decision maker has you send $16, you will have $4 left over. Your total payoff will equal the $4 left over.

  • Your payoff = $4]

Your payoff in this experiment will be completely private. The person who collects the envelopes from the decision makers will not see the decisions written on the forms. The envelopes will be given to another experimenter. Using the rules above, this experimenter will put the payoff of each sender and receiver into envelopes and return the envelopes to the monitor. The monitor will then ask you for your ID letter. When you present your ticket with your ID letter, you will receive the envelope with your payoff.

This process guarantees that all envelopes will be opened and all money will be handled by someone who sees an ID letter, but not a name, so that nobody is able to match a decision with the identity of either the senders, decision makers or receivers.

You should not talk to anyone about how much money you, or they, get. Note that these procedures guarantee that no other person will be aware of your payoff.

If you have questions at any time during the experiment, please quietly raise your hand and someone will come over to assist you. Please do not talk with any other participants during the experiment.

Appendix B: Word-Search Task for Earned Income

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Chavanne, D., McCabe, K.A. & Paganelli, M.P. Shared Experience and Third-Party Redistribution. Eastern Econ J 45, 446–463 (2019). https://doi.org/10.1057/s41302-018-0117-6

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  • DOI: https://doi.org/10.1057/s41302-018-0117-6

Keywords

  • Allocation decisions
  • Third-party fairness
  • Similarity

JEL Classification

  • C91
  • D31
  • D63

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