Natural Rationality | decision-making in the economy of nature


More stats on Radiohead's "Dictator Game"

In a previous post, I tried to analyze the sales of Radiohead's last album (fans decide how much they want to pay for downloading the album). I suggested that it was analogous (but not exactly) to a dictator game. More stats are now available at about the downloads and payments: 38% paid for download [62% downloaded for free] Those who paid spent an average of $6.00 (given that buying an album through Itunes costs $9.99, that's like giving 60% of the "pie"). 44% of those who paid (17% of all downloaders) paid between $0,01 and $4,00. So 3 out of 5 users are "freeloaders", and almost half of the payers sent $4 or less. Since it is (almost) an anonymous dictator game (DG), that is not really surprising: less publicity, less generosity:

[in Hoffman et al (1996)] we conjectured that the social connection –we called it “distance” –may not have gone far enough in the DG (...) We were surprised, not just that the “double blind” made a large economic difference –giving nothing rose from 20% to 64% –but that, by relaxing the double blind conditions incrementally, the results stepped down incrementally to the baseline.

[Cherry et al. (2002)| compare endowments given by the experimenter with money earned by the subjects: the percent of dictators giving nothing jumps from 19% to 79%. And the latter rises to 97% when double blinded. Strengthening the sense that the stakes belong to the dictator, combined with “no one can know” his or her decision, all but eliminates dictator giving.

(Vernon Smith, 2005:834)
  • Hoffman, E., McCabe, K. & Smith, V. L. (1996) Social distance and other regarding behavior in dictator games. American Economic Review 86 (3):653– 60.
  • Cherry, T., Frykblom, P. & Shogren, J. (2002) Hardnose the dictator. American Economic Review 92:1218–21.Quarterly Journal of Economics114:817–68.
  • Smith, V. (2005) Sociality and self interest. Behavioral and Brain Sciences, 28(6), 833-34.