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, the politician-dictator wants to keep the entire amount without losing his/her social image in T1, how could he/she hide his/her true actions?

	a.	They can hide behind the nature always in T1 as nature intervenes with probability 0.8 and allocate the endowment either to D or to R.
	b.	Cannot hide their actions when the dictators (Ds) and recipients (Rs) sit in the same room.
	c.	Both answers "Cannot hide their actions when the dictators (Ds) and recipients (Rs) sit in the same room" and "Can only hide in T2".
	d.	Cannot hide anyway.
	e.	Can only hide in T2.

Answer 1

The dictator cannot hide in T1 as if they hide behind nature and say that nature has distributed such that the recipient gets none, then it is assumed that the dictator has got all. So dictator should share. Also, if dictator actually has got none, then the recipient will have got all and so dicttor cannot get full share of endowment.

When both dictator and recipient are in the same room, it is not possible to hide. So the second option is true.

In treatment 2, it is possible for the dictator to hide. So the 4th option is wrong. The fifth option is correct.

So the correct answer is Both answers "Cannot hide their actions when the dictators (Ds) and recipients (Rs) sit in the same room" and "Can only hide in T2"

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