No abstract

No abstract

We here present both experimental and theoretical results for an Anticipation Game, a two-stage game wherein the standard Dictator Game is played after a matching phase wherein receivers use the past actions of dictators to decide whether to interact with them. The experimental results for three different treatments show that partner choice induces dictators to adjust their donations towards the expectations of the receivers, giving significantly more than expected in the standard Dictator Game. Adding noise to the dictators’ reputation lowers the donations, underlining that their actions are determined by the knowledge provided to receivers. Secondly, we show that the recently proposed stochastic evolutionary model where payoff only weakly drives evolution and individuals can make mistakes requires some adaptations to explain the experimental results. We observe that the model fails in reproducing the heterogeneous strategy distributions. We show here that by explicitly modelling the dictators’ probability of acceptance by receivers and introducing a parameter that reflects the dictators’ capacity to anticipate future gains produces a closer fit to the aforementioned strategy distributions. This new parameter has the important advantage that it explains where the dictators’ generosity comes from, revealing that anticipating future acceptance is the key to success.

Review of previous research highlights 2 pairs of inconsistent reactions to rare events: (a) studies of probability judgment reveal conservatism (that implies overestimation of rare events) and overconfidence (that implies underestimation of rare events); (b) studies of choice behavior reveal overweighting of rare events in 1-shot decisions under risk, and underweighting of rare events in repeated decisions from experience. The current analysis shows that the 4 biases are not inconsistent, but that they can be the product of 2 distinct sources of errors that affect human judgment and decision making: reliance on small samples of past experiences, and overgeneralization, that is, the tendency to confound previously encountered tasks. The former is a sufficient condition for overconfidence and underweighting of rare events, whereas the latter is sufficient for conservatism and overweighting of rare events. Importantly, this "2-error" explanation leads to a novel prediction: It implies that overconfident judgment triggers overweighting of rare events in 1-shot decisions under risk, in which the relevant objective probabilities are known to decision makers. This prediction is based on the assumption that the overgeneralization that affects choice behavior is a reflection of the perceived similarity between decisions under risk and decisions with estimated risk, in which decision makers can only rely on (overconfident) subjective estimates of the relevant probabilities. The value of this analysis and of a computational abstraction of the "2-error" hypothesis is demonstrated in 3 experimental studies.