26 Jan 2011Working Paper Summaries

Conveniently Upset: Avoiding Altruism by Distorting Beliefs about Others

by Rafael Di Tella and Ricardo Pérez-Truglia

This paper explores the idea that people who can take advantage of a particular situation will tend to believe that others would choose to take advantage of the same situation if given the chance-thus helping to justify the decision to act selfishly. In their research, Harvard Business School professor Rafael Di Tella and Harvard PhD student Ricardo Pérez-Truglia test their hypothesis on a group of well-heeled Argentinean college students, using a modified version of the "dictator game" in which both the "dictators" and the "recipients" are given the chance to make a selfish choice. Key concepts include:

The researchers conducted a modified dictator game in which the "dictator" player could take any percentage of tokens from the "recipient" player (à la taxation), but the recipient player could reduce the overall size of the pie in exchange for a personal side payment (à la hiding economic activities from the authorities).
In general, the dictators who chose to take a large number of tokens from the recipients reported believing that the recipients would choose to take the side payment-that is, to make a selfish choice.
The results of the experiment support the idea that people often avoid altruistic actions by letting themselves believe that others are selfish, too.

Author Abstract

In this paper we present the results from a "corruption game" (a dictator game modified so that the second player can accept a side payment that reduces the overall size of the pie). Dictators (silently) treated to have the possibility of taking a larger proportion of the recipient's tokens, take more of them. They were also more likely to report believing that the recipient would accept a low price in exchange for a side payment; and selected larger numbers as their best guess of the likely proportion of recipients acting "unfairly". The results favor the hypothesis that people avoid altruistic actions by distorting beliefs about others.