Ultimatum and dictator in four-year-olds

Lucas, M., Wagner, L., & Chow, C. (2008). Fair game: The intuitive economics of resource exchange in four-year olds. Journal of Social, Evolutionary, And, 2(3), 74–88. Retrieved from http://137.140.1.71/jsec/articles/volume2/issue3/JSEC2-3_Lucas.pdf

This is an interesting paper in an area that needs more research, namely, how children perform in economic games. The typical questions go as follows: Are children altruistic? Are they selfish?

The authors review and criticize some of the relevant previous research. Murnighan & Saxon (1998) found that kindergartners made larger ultimatum offers and accepted smaller ultimatum offers of candy than did third or sixth graders. However, Lucas et. al argue that Murnighan & Saxon’s results are probably not valid since they use a kind of simulated game, in which the child is asked to imagine that another child offers such and such amount of candy (instead of actually playing the ultimatum game). They also quote Harbaugh, Krause, & Liday (2003), who found that seven-year olds made and accepted smaller ultimatum proposals than adults; and Hill and Sally (2006), who found that 6-year-olds already make offers as fair as those of adults after repeated rounds of play. Benenson, Pascoe and Radmore (2007), on the other hand, found that very young children can be altruistic when playing dictator (4-year-olds donated, on average, 25% of a stake of ten stickers to another classmate).

The authors also mention a problem with some of the previous research: often, researchers make children play with tokens that have no inherent value; children are explained that they will be able to trade the tokens for other stuff later. Lucas et al. argue that researchers should use items with tangible, real value for children, such as candy, stickers or toys, since the use of “symbolic” tokens poses additional cognitive demands on children and might affect experimental results.

Lucas et al. found, in their own study, that children made, on average, offers of 4.7 stickers in the ultimatum game and 3.99 stickers in the dictator game. That is, children seem to be making quite fair offers.

It is well established that adults give an average of 40% of the money at stake in ultimatum. But there is a big difference between the 4-year-olds’ 47% and the adults’ 40%. In adults, the mode (i.e., the most frequent answer) is 50%, while some adults give 40%, 30% or less, and almost no one offers more than 50%. However, some of Lucas el al.’s 4-year-olds offer more than 50%.  They call this phenomenon hyperfair offers. There is a qualitative difference between adults and children: adults oscillate between the fair (“half and half”) and the strategic (“less than half”). Many children, by way of contrast, offer more than is fair, more than half the stake.

“(…) the percentage of hyperfair offers (…) increased from 18% in the dictator game to 33% in the ultimatum game. Adults, in contrast, almost never make hyperfair offers (only 3.5% of offers in Lucas, Et al., (2007) were hyperfair).”

Lucas et al. also report that, in their study, children did not seem to take into account the behavior of the other player in their responses, even if it was unfair. In the dictator game, children did not change the amount of their offer in response to receiving either a low or fair offer from the friend. Children’s offers for the second game were also not affected by whether the friend had accepted or rejected the child’s first offer.

The results of the dictator game suggest that children in the sample are quite altruistic: “The adult average offer of 20% of the stake in the dictator game (Camerer, 2003) is usually interpreted as evidence that individuals have preferences for altruism, since proposers could offer less in a dictator game without fear of rejection. With an average offer in the dictator game of 40% of the stake, our sample of children made more altruistic offers than adults.”

Children’s average offer of 4 stickers (or 40% of the stickers at stake) doubles adults’ typical offer of 20% of the money at stake in dictator, and does not seem to far away from the 47% children offered in the ultimatum game. How do Lucas et al. explain these data? “(Children’s) ability to perform a cost/benefit analysis was limited. They did not seem to appreciate the degree to which they could “shade” their offers without penalty.” Thus, Lucas et al. are assuming that children have the desire or goal of keeping as many stickers as possible but they that their strategic thinking is deficient. “Children were more generous than they needed to be and were limited in their ability to act strategically in bargaining games in order to maximize their own benefits while avoiding the costs of rejection.”

Lucas et al.’s conclusion: “children are quite altruistic”, “they may have an innate sense of fairness and altruism.” This result is, in my opinion, over-simplistic. Previous research in economic psychology has established that adults are altruistic and fair to some degree, but also a little bit selfish and strategic. Lucas et al. assume, therefore, that either children are born altruistic, fair and strategic or they learn these behaviors along the way. If research shows that children are completely selfish, then altruism is learned. If it shows they are altruistic from the start, then it must be innate.

I quote them: “We predicted that children would perform similarly to adults in showing preferences for fairness and altruism. Alternatively, and as some others have found, children could be less fair, indicating that fairness must be learned over the course of development.”

They start with a binary opposition between selfishness and altruism. In this approach, learning is seen as lineal, cumulative, unidirectional. They start with some innate concepts and, while learning, children simply absorb information from their milieu or copy adult models, until they reach the end-point.

There are other possibilities, however. For example: young children might be neither selfish nor altruistic. They might be following other types of reciprocity not related to the fair, contract-like, 50/50 reciprocity of adults. They might use an associative reciprocity of the kind “I give a lot of stickers to the other kid because I like to make friends” (see Faigenbaum, 2005), that are typical of children’s peer cultures and of exchanges within the family. Such an approach dispels the apparent inconsistencies of previous research: it’s not just that children are not yet able to think “strategically”. They are not even interested in this kind of reasoning.

Associative reciprocity might explain why kindergartners make large ultimatum offers and accepted small ultimatum offers of candy (Murnighan & Saxon, 1998) or why 4-year-olds can be so altruistic when playing dictator (Benenson, Pascoe and Radmore, 2007). It might also explain the results of Lucas et al.’s own research, for example, why children give 40% of the stake in the dictator game.

Some references

Faigenbaum, G. (2005). Children’s Economic Experience: Exchange. Buenos Aires: LibrosEnRed.

Harbaugh, W. T., Krause, K. S., & Liday, S. J. (2003). Bargaining by Children. Social Science Research Network, 1–40. https://doi.org/10.2139/ssrn.436504

Lucas, M., Wagner, L., & Chow, C. (2008). Fair game: The intuitive economics of resource exchange in four-year olds. Journal of Social, Evolutionary, And, 2(3), 74–88. Retrieved from http://137.140.1.71/jsec/articles/volume2/issue3/JSEC2-3_Lucas.pdf

Murnighan, J. K., & Saxon, M. S. (1998). Ultimatum bargaining by children and adults. Journal of Economic Psychology, 19(4), 415–445. https://doi.org/10.1016/S0167-4870(98)00017-8

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Exploring the first possessor bias in children. Nole & Keil.

Noles, N. S., & Keil, F. C. (2019). Exploring the first possessor bias in children. PLoS ONE, 14(1), 1–13. https://doi.org/https://doi.org/10.1371/journal.pone.0209422

Very interesting and insightful paper. The authors set out to explore an apparent contradiction: on the one hand, very young children (even 2-year-olds in some studies) are adept at linking property to owners. On the other, there is research that reports that children systematically conserve property with the first possessor, even after a legitimate transfer of the property to a second possessor (e.g., after a sale, a present).

This study tests children, ages 7 through 10, for the presence of a first possessor bias in first- and third-person situations, and for different types of property transfers (gift, sale, loss, etc.)

A first experiment used third-person scripts depicting different types of property transfers. The authors found that seven- and eight-year-olds, but not older children, exhibited a first possessor bias. “Children under 9 commonly inferred that first-possessors maintained ownership of property, even after they unambiguously transferred the property to another person.” “Experiment 1 reveals that the first possessor bias influences ownership attributions among children age 7 and 8, but not 9 and 10.” “Experiment 1 demonstrates that the first possessor bias persists much longer into development than previously thought.” “This result replicates previous findings and expands upon those studies, suggesting that the first possessor bias influences a wider swath of property transfers than previously demonstrated, and that children’s ownership attributions are affected by this bias for longer than previously reported.”

At the same time, they found that the bias was greatly attenuated or absent when property transfers were presented in a first-person context. This was demonstrated in a second experiment, in which “Participants were always framed as the recipients or second actor in each scenario, and they were asked who owned the target object at the end of each trial. Participants indicated that the item either belonged to them or to the experimenter.” “In Experiment 2, all age groups demonstrated attenuated endorsement of the first possessor with respect to stealing (…) context powerfully influences intuitions about property transfers in both children and adults.” “Experiment 2 provides an explanation for the mismatch between intuitions that children do understand property transfers early in development, and findings that children’s intuitions about property transfers are fundamentally biased. Specifically, manipulating the presentation context (i.e., presenting transfers in a first-person context) resulted in children generating adult-like ownership attributions for typical property transfers such as giving and selling.”

One important consequence for the study of the development of ownership is that there is a big gap between first- and third-person reasoning. Thus one can reconcile research by Rossano, Rakoczy, & Tomasello (2011) among others, that shows that 3-year-olds recognize property rights when laboratory situations resemble real-life situations, with other studies which use third-person narratives and find errors in reasoning about property rights in children until at least age 10 (Kim & Kalish, 2009).

The authors speculate that the first-possessor bias has adaptive value: “it is possible that young children are less adept at reasoning about property transfers because these events are more ambiguous, and more likely to be intervened upon, than non-transfer scenarios. Given these circumstances, maintaining strong bonds between owners and their property may be a more functional approach for young children than reasoning in a more adult-like and “accurate” manner.”

Kim, S., & Kalish, C. W. (2009). Children’s ascriptions of property rights with changes of ownership. Cognitive Development, 24(3), 322–336. https://doi.org/10.1016/J.COGDEV.2009.03.004

Noles, N. S., & Keil, F. C. (2019). Exploring the first possessor bias in children. PLoS ONE, 14(1), 1–13. https://doi.org/https://doi.org/10.1371/journal.pone.0209422

Rossano, F., Rakoczy, H., & Tomasello, M. (2011). Young children’s understanding of violations of property rights. Cognition, 121(2), 219–227.

Klass & Zeiler: Endowment theory is wrong.

Klass, G., & Zeiler, K. (2013). Against Endowment Theory: Experimental Economics and Legal Scholarship. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2224105

This is a remarkable article. The authors make a clear-cut claim and justify this claim by means of a strong and convincing argument, grounded in experimental research; they put their claim in historical context; they spell out some implications of their claim for future research; and all along they cover an impressive amount of literature from different disciplines. They know their shit back and forth.

The simple claim is that endowment theory, at least as it has been commonly interpreted in behavioral economics and, derivatively, in legal studies, should be rejected.

The core of their argument is straightforward. It is generally accepted that the endowment effect expresses itself in the laboratory by means of exchange asymmetries: for example, people who are randomly assigned the mug don’t want to trade it for the pen, and vice-versa. In valuation studies, it expresses itself in a gap between the Willing-To-Accept and Willing-To-Pay prices: the amount of money someone is willing to pay for a concert ticket is less than what the same person is willing to accept to give up a ticket that she already has. Plott & Zeiler (2005), however, in a series of studies, found that those gaps and asymmetries can be made to disappear by manipulating contextual variables. For instance, typically, when the endowed good is handed to the participant, she is told, “I’m giving you the mug.  It is a gift.  You own it.  It is yours.”  But this utterance might signal that the mug is very valuable. When one substitutes this phrasing with a simpler formulation such as “the mug is yours, you own it,” and one also tweaks other factors (decisions are anonymous, the pen and the mug are at the same physical distance from the subject, etc.), the endowment effect tends to vanish. The endowment effect, to sum up, is an artifact of the researchers’ faulty methods that goes away when one controls all relevant variables.

The article provides historical context for the emergence of endowment theory. Behavioral economists used the endowment effect as a paradigmatic spearhead against neoclassical economics. The clash (and the types of arguments used) reminds me of intercultural psychology critique of homo economicus (Henrich et al., 2007).

In the conclusions, the authors emphasize that simple experiments on human decision making do not translate automatically into normative or political recommendations. Rather, they contribute to corroborate or falsify a theory, and it is theories that can eventually have normative implications.

Klass and Zeiler’s description of the endowment effect changed my understanding of it. They emphasize that, for endowment theory to be true, the increase in value has to result only from pure ownership, that is, from the mere fact that one has an entitlement. Let’s say that there are two mugs, and I own mug 1 but not mug 2, and mug 1 and mug 2 are identical, and both are placed at the same distance from me, and there are no facts in the object history that create any bond between me and any of the mugs. Klass and Zailer seem to claim that, according to endowment theory, I should still value mug 1 more than mug 2, because of the sheer fact that I am mug 1’s owner.

That is: Klass and Zeiler emphasize that pure, “abstract” ownership should be responsible for the endowment effect, and not the history of how the object came to be mine. Thus, they seem to exclude value resulting from attachment to the object (“emotional” or “sentimental” value). By free association, I am reminded of the Kantian view of duty as resulting from bare respect for the moral law. That is: I behave morally not because I feel some subjective satisfaction or pride in being moral, or because some utilitarian calculation that moral behavior will produce the greatest good. I think and act in accordance with my duty because that’s what I ought to do, period. In endowment theory, my thinking and acting is affected by my right, period.

I previously thought (perhaps erroneously) that the endowment effect relied in a richer conception of ownership that included psychological aspects, such as the individual’s attachment to the specific object and the pride one feels for one’s belongings. In my opinion, this view is represented by Gelman & Davidson’s (2016) study on children’s preference for unique owned objects; McEwan, Pesowski, & Friedman (2016) research showing that children view owned objects as non-fungible; Gelman, Manczak, & Noles (2012) paper that claims to have identified an endowment effect in children 2 and 3 years of age: “The present findings suggest that positive evaluation of and preference for one’s own possessions is a basic cognitive disposition, even before children have experience with conventional economic transactions.” There are many other researchers in the field of ownership (Rochat, Ross, etc.) that seem to have this richer understanding of what owning an object means. Perhaps developmental psychologists have misread endowment theory; perhaps they’re talking about a different phenomenon.

This richer view of the subject-object relationship has many antecedents in psychology. One may think of attachment theory, Winnicott’s transitional objects, etc. These different theories are not akin to the cold inclusion of the ownership title in the algorithm that calculates value, but to the warm fact that I value an object because it became mine in a certain context, as result from a certain history. Objects are extensions of the self (here I could quote some twenty developmental psychologists); ownership of property constitutes an important aspect of the construction of self-identity and of boundaries between myself and others.

Hume says something similar in his book on Emotions, in his Enquiry Concerning Human Understanding. One is proud only of the things one owns. In Humean terms, the idea that this mug is splendid and the idea that it belongs to me are associated to each other. The fact that the things that relate to my self (my body, my watch, my horse, my children, my estate, my country) are beautiful or valuable increases my pride; conversely, if my self-esteem is high I will tend to consider that my stuff is the best, just because it’s mine.

References:

Gelman, S. A., & Davidson, N. S. (2016). Young children’s preference for unique owned objects. Cognition. https://doi.org/10.1016/j.cognition.2016.06.016

Gelman, S. a., Manczak, E. M., & Noles, N. S. (2012). The nonobvious basis of ownership: Preschool children trace the history and value of owned objects. Child Development, 83(5), 1732–1747. https://doi.org/10.1111/j.1467-8624.2012.01806.x

Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E., Mcelreath, R., … Sciences, B. (2007). “Economic Man” in Cross-cultural Perspective : Behavioral Experiments in 15 Small-scale Societies. Social Dynamics, 204(06), 795–815.

Klass, G., & Zeiler, K. (2013). Against Endowment Theory: Experimental Economics and Legal Scholarship. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2224105

McEwan, S., Pesowski, M. L., & Friedman, O. (2016). Identical but not interchangeable: Preschoolers view owned objects as non-fungible. Cognition, 146, 16–21. https://doi.org/10.1016/j.cognition.2015.09.011

Plott, C. R., & Zeiler, K. (2005, June 1). The Willingness to Pay-Willingness to Accept Gap, the “Endowment Effect,” Subject Misconceptions, and Experimental Procedures for Eliciting Valuations. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=615861

 

Vondervoort & Friedman – Ownership of objects and ownership of one’s own body

Van de Vondervoort, J. W., & Friedman, O. (2015). Parallels in preschoolers’ and adults’ judgments about ownership rights and bodily rights. Cognitive Science. https://doi.org/10.1111/cogs.12154

Another interesting article by the prolific Ori Friedman and his team. They have produced a sustained series of very focused studies, guided by the conviction that ownership can be explored within a cognitive framework, and that our knowledge about the development of ownership can be built piece by piece. They divide the field into small issues and take them up one by one.

The paper starts by asking interesting and relevant questions about the relationship between ownership of objects and ownership of one’s own body.

Young children appreciate ownership rights from very early on (around 2 or 3 years of age, depending on the author and research method). They recognize ownership rights before they appreciate rights in other domains. Bodily rights (rights to control one’s own body) also seem to appear early in development. Based on legal theory, one might hypothesize that these two kinds of rights are closely related (remember John Locke’s justification of the origin of private property?). One possible question, then, is to what extent ownership rights and bodily rights are related to each other, both in legal theory and in cognitive development. Do they follow from the same principles, but are applied to two different kinds of entities? Or, alternatively, do they belong to completely different conceptual and normative domains?

The paper, then, examines whether people make similar evaluations when considering the acceptability of actions performed on owned property and body parts. Preschoolers (Experiment 1) and adults (Experiment 2) were presented with scenarios about a boy and a girl, and they evaluated how good or bad the boy’s actions were. The scenarios varied in whether the target of the boy’s action was an owned object or a body part, in whether the target belonged to the boy or to a girl, and in whether the girl approved of the boy’s action.

The results: preschool-aged children and adults responses did not vary when evaluating the acceptability of harmless actions targeting owned property and body parts.  The same pattern of responses was observed for both cases (scenarios targeting body parts and scenarios targeting owned property).

Evaluations were influenced by two other manipulations: whether the target belonged to the agent or another person, and whether that other person approved of the action. The researchers found that, when the other person approved of the action, participants’ judgments were positive regardless of who the target belonged to. In contrast, when that person disapproved, judgments depended on who the target belonged to (owner – non-owner). These findings show that young children grasp the importance of approval or consent for ownership rights and bodily rights. Both children and adults seem to understand that, in scenarios where the girl disapproved of the boy’s actions, he violated her ownership rights when he acted on her property (or body), but not when he acted on his own property (or body).

The study lends support to the idea that people’s notions of ownership rights are related to their appreciation of bodily rights.

Differently from other, more straightforward and elegant studies by Ori Friedman and his colleagues, the method used here is somewhat complicated: the 5-grades complex scale used to measure children’s responses (considering they were working with 4 y.o.’s) ;the fact that the active agent is always a boy and the passive evaluator is always a girl (which probably creates a gender confound); the fact that children are have to react to the character’s opinion with their own opinion (in a third person perspective)… This complicated setup obscures the results to some extent.

 

Ownership and emotions in toddlers and preschoolers

Pesowski, M. L., & Friedman, O. (2015). Preschoolers and toddlers use ownership to predict basic emotions. Emotion (Washington, D.C.). https://doi.org/10.1037/emo0000027

 


 

This is a very simple and elegant study that shows that toddlers and preschoolers appreciate how ownership affects emotions. The researchers used a couple of straightforward scripts to present children with situations involving transgression of ownership rights, and to ask about the emotions elicited in the characters. For example, a character left a teddy bear on a bench and, upon returning, found her teddy bear (vs. someone else’s teddy bear, in the other condition) missing. In another situation, a character saw another character using her toy.

The researchers concluded that preschoolers and toddlers appreciate how ownership influences emotions.  Children understood that an owner would be more saddened by the disappearance of an object belonging to her as compared with the disappearance of someone else’s property.

The authors believe these findings are “striking” because in two (out of three) experiments the violation of ownership rights was harmless and did not involve an overtly negative outcome. In my words, children understand that the characters are sad or mad not because of an “objective” damage, harm or loss, but because of the violation of their rights. A child might be upset by the very fact that someone is touching her toy. This territoriality is at the core of the phenomenon of ownership. The paper seems to suggest that, already at two, children master the fundamentals of the institution of ownership. They know the rules of the game.

The authors also think their results are significant because “few previous studies show that 2-year-olds can predict emotions”, and because “no previous studies found that 2-year-olds are sensitive to other people’s ownership rights.” In particular, they refer to a well-known paper by Rossano, Rakoczy, & Tomasello (2011) that claims that 3-year-olds, but not 2-year-olds, defend third-person ownership rights.

 

Cited:

Pesowski, M. L., & Friedman, O. (2015). Preschoolers and toddlers use ownership to predict basic emotions. Emotion (Washington, D.C.). https://doi.org/10.1037/emo0000027

Rossano, F., Rakoczy, H., & Tomasello, M. (2011). Young children’s understanding of violations of property rights. Cognition, 121(2), 219–227.

How is a Possession “Me” or “Not Me”?

Kleine, S. S., Kleine, R. E., & Allen, C. T. (1995). How is a Possession “Me” or “Not Me”? Characterizing Types and an Antecedent of Material Possession Attachment. Journal of Consumer Research. http://doi.org/10.1086/209454

The researchers carried out two studies in which they interviewed adults (N=30 for the first one, N=24 for the second one), using Q-methodology to describe their attachment to objects across a number of variables or “factors.”

The authors found that study participants felt strongly attached to some possessions that they liked, were proud of, or felt that expressed who they were. Participants tend to keep these possessions, at least as long as they feel they represent them; when they stop having this positive valence, they get rid of them. However, there seems to be a group of possessions that participants did not like anymore and, more importantly, felt not connected with. However, they did not dispose of such “not me” possessions. Those were the possessions that were gifts, or that were personally linked to a significant person. Thus they found that 52 percent of the “not-me” possessions were gifts. “Apparently, gift receipt adds a layer of affiliation that makes even not-me objects more difficult to dispossess.”

This study shows an interesting approach to ownership that is certainly different from the stuff I’m used to read.  For starters, it was carried out with adult participants and it was published in a “Journal of Consumer Research”. Therefore, the authors do not deal with cognitive-developmental issues. The methodology seems to me obscure and not very rigorous, although I confess I’m no expert in Q-methodology. Some of the conclusions strike me as outright arbitrary. However, it was worth the read.

Susan Gelman on children’s preference for unique owned objects

Gelman, S. A., & Davidson, N. S. (2016). Young children’s preference for unique owned objects. Cognition. https://doi.org/10.1016/j.cognition.2016.06.016

This is an incredible and profound study on children’s attachment to objects, with implications both for cognitive and emotional development. It’s also a study that amazes me for the amount of work it required from researchers (who had to find brand-new replicas of more than 100 children’s attachment objects).

The experimental design is quite simple. Researchers asked 36 three-year-olds to choose between two toys for either themselves or the researcher: an old (visibly used) toy vs. a new (more attractive) toy matched in type and appearance (e.g., old vs brand-new blanket). Focal pairs contrasted an old toy that belonged to the child with a matched new object; control pairs contrasted toys the child had never seen before.

The conclusion of the study is that, by 3 years of age, young children place special value on unique owned objects. Children prefer their original objects to newer, better versions, but only in the case of the focal pairs (with their objects of attachment) and not with the control pairs (objects the child had never seen before). These findings are consistent with the view that possessions are extensions of the self.

In addition, these preferences hold for “sleep” objects (blanket, pillow) and toys representing an animated character (dolls, action figures) but not for inanimate objects (a car, a toy hammer, etc.) Uniqueness is valued for sleep objects and animate toys, but not for inanimate toys. Moreover, in 30 out of 31 cases, attachment objects had a proper name. Ownership, attachment and anthropomorphism (eyes, animated features, soft or furry texture) all combine to enhance children’s preferences for their own objects.

In addition, children seemed to understand that their special objects had value for them only in so far as they share a history with the object. That is, they did not attribute the researcher the same preference for the old (attachement) object. In this sense, they seem to understand the subjective nature of value.

The results are remarkable, among other things, because of the understanding of the abstract ownership relationships, the distinction between appearance and reality and the perspective-taking abilities involved in children’s responses. The authors also emphasize how attuned any child can be to minor features of an object that indicate that it is her unique object and not a substitute.

These findings also offer a different (experimental, cognitive) perspective on the phenomenon of “transitional objects,” first described by Donald Winnicott in the 1950s.

A remarkable study indeed.