Power and Social Preferences: The Role of Hierarchy in Promoting Selfishness

Abstract

We run an experiment in order to evaluate the relationship between power, or the search for power, and the degree of altruism. In particular we experimentally tested whether an organization structured in a strictly hierarchical way was able to reduce the degree of altruism of a group of experimental subjects. The subjects were divided into groups and played a series of dictator and ultimatum games with the members of other groups; for each experimental euro that they earned, the experimenter assigned half of it to the group. Two different settings were analyzed according to how this group surplus was distributed among group members. In the control setting (treatment A) the group surplus was distributed equally among group members, while in the power setting (treatment B) there was a ranking of the earnings in the group, and the subject who earned the higher sum was given the power to decide the distribution scheme of the group surplus. It is argued that this latter setting represents a very general framework and can mimic different real life situations: the straightforward interpretation is to look at this hierarchical organization as a firm in which the most productive - here, the least altruistic - subject takes the lead, but the frame is valid for any structured group in which there is competition for leadership. The results are quite interesting. It is found that the introduction of a hierarchical structure significantly modified the behaviour of subjects; in particular, the power tournament led to a decrease in the rate of altruism, measured in terms of the allocation given to the receiver in the dictator game. It appears that an important role in the dynamics of the experiment was played by some agents' reciprocative behaviour which acted as a powerful device in spreading selfish behavior among agents.

Keywords: Altruism, Dictator game, Ultimatum game, Hierarchy

JEL Classification: C91, D64