Social preferences and cognitive reflection: evidence from a dictator game experiment

Area of Science:

• Behavioral Economics
• Cognitive Science
• Experimental Economics

Background:

• Understanding the interplay between cognitive abilities and social preferences is crucial for explaining economic decision-making.
• Previous research has explored factors influencing fairness and altruism, but the specific role of cognitive reflection remains debated.

Purpose of the Study:

• To experimentally investigate the relationship between cognitive abilities, measured by the Cognitive Reflection Test (CRT), and social preferences in economic decisions.
• To examine how different cognitive profiles (reflective vs. impulsive) influence behavior in various dictator game scenarios.

Main Methods:

• Participants completed the Cognitive Reflection Test (CRT) to assess cognitive abilities.
• Social preferences were elicited through 24 dictatorial situations, including standard, efficient, and payoff-constant scenarios.
• Subjects were categorized as reflective (CRT score ≥ 2), impulsive (≥ 2 intuitive errors), or remainder.

Main Results:

• Impulsive dictators demonstrated significant inequity aversion, particularly in standard dictator games where gains were not shared.
• Reflective dictators exhibited lower distributional concerns overall, but increased giving when their own payoff was held constant.
• The study identified distinct patterns of social preferences linked to cognitive reflection levels.

Conclusions:

• Cognitive abilities, specifically the tendency towards reflective or impulsive decision-making, significantly shape social preferences and fairness considerations.
• Understanding these cognitive-economic links can inform theories of social behavior and policy design.
• The findings highlight the heterogeneity in decision-making strategies based on cognitive reflection.