Paper Human Development 2008;51:235–261 DOI: 10.1159/000151494

When Child Development Meets Economic Game Theory: An Interdisciplinary Approach to Investigating Social Development Michaela Gummerum a Yaniv Hanoch a Monika Keller b a University of Plymouth, Plymouth, UK; b Max Planck Institute for Human Development, Berlin, Germany

Key Words Economic game theory ⴢ Fairness ⴢ Reciprocity ⴢ Social development ⴢ Theory of mind ⴢ Trust

Abstract Game theory has been one of the most prominent theories in the social sciences, influencing diverse academic disciplines such as anthropology, biology, economics, and political science. In recent years, economists have employed game theory to investigate behaviors relating to fairness, reciprocity, and trust. Surprisingly, this research has not found much resonance in psychological research on social development, even though the two disciplines share a common interest in explaining similar social behaviors and phenomena. We argue that combining economic game theory with developmental psychology can prove to be valuable for both disciplines: developmental psychology can contribute its knowledge about the ontogenesis of social abilities and competencies to economic research, thus providing economists with new theories and understanding. Game theory, on the other hand, can offer developmental psychologists new methodologies and tools for investigating social development. Copyright © 2008 S. Karger AG, Basel

In recent years, economists have become increasingly interested in behaviors related to fairness, reciprocity, altruism, and trust, and one of the main tools for examining these issues has been game theory. Despite the ubiquity of game theory – it strongly influenced foreign policies and its practitioners have received Nobel prizes – this research has found little resonance in developmental psychology, even though the two fields have an overlapping interest in such concepts as fairness, prosociality, and trust. In this article, we would like to introduce the paradigm of economic game theory to a broader developmental psychological audience. Adopting a

© 2008 S. Karger AG, Basel 0018–716X/08/0514–0235$24.50/0 Fax +41 61 306 12 34 E-Mail [email protected] Accessible online at: www.karger.com www.karger.com/hde

Michaela Gummerum School of Psychology, University of Plymouth Drake Circus, Plymouth, PL4 8AA (UK) Tel. +44 1752 584 828, Fax +44 1752 233 362 E-Mail [email protected]

game theoretical perspective promises to open interesting and novel avenues to investigate issues in the social development of children using a different theoretical and methodological point of view. At the same time, developmental psychologists can contribute their knowledge about the ontogenesis of social abilities and competencies to economic research, a topic that economists have largely ignored. Thus, we believe that combining game theory with developmental psychology can be extremely beneficial for both disciplines. It can provide economists with new theories and understanding, while enriching developmental psychology with new methodologies and tools. In what follows, we will first describe the major tenets of economic game theory and relate this paradigm to research in developmental and social psychology. Then, we will give examples of recent applications of economic game theory in the field of developmental psychology and suggest a few possible directions in which this research agenda could lead. In the final section, we will discuss the implications of this interconnection for both fields. What Is Game Theory?

Game theory investigates the logic of interactive decisions, that is, decisions in which two or more decision makers are involved. Originally a branch of mathematics, game theory aims to analyze decision making in social situations distinguished by the following features: they involve two or more decision makers, called players; each player can choose among two or more ways of acting (i.e., strategies), and the outcome of the interaction depends on the choices of all players; all players have clearly defined preferences across the set of possible outcomes, and each outcome can be assigned a numerical payoff, which reflects the preferences of the players (payoff function) [Camerer, 2003; Colman, 1995, 2003a; Kagel & Roth, 1995]. A game is supposed to be an idealized abstraction of a specific social situation with explicitly defined basic elements (players, strategies, payoffs) and connecting rules. The rules of the game specify what actions are available for each player, how these actions can be carried out, what players know when they take these actions, and what outcome is connected with each possible combination of decisions by all players. To be scientifically relevant, a game has to include all the important properties of the social situation and model the interaction accurately [Colman, 2003a]. Mathematical game theory investigates which strategies rational players should choose if they are acting economically rationally. In this sense, mathematical game theory is normative, that is, it does not describe what real players do in an actual interaction. According to Colman [2003a], ‘rational decisions or choices are those in which agents act according to their preferences, relative to their knowledge and beliefs at the time of acting’ (p. 141). Preferences are thought to be rational if they obey the conditions of completeness, transitivity, and context-free ordering, which is also termed the weak ordering principle [McClennen, 1990]. In 1944, von Neumann and Morgenstern showed that it is possible to define a function u( g) that assigns a numerical expected utility to every outcome of a game. Agents who maximize their expected utility u( g) act according to their preferences and show instrumental rationality (expected utility theory). An empirical test of the assumptions of expected utility theory and an investigation of players’ actual behavior in various games have been undertaken in the social and biological sciences. Empirical game

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theory, especially in economics, has also been coined behavioral game theory [Camerer, 1997]. Game theory differentiates between different kinds of games: games of skill (individual decision making under certainty), games of chance (individual decision making under risk or uncertainty), and games of strategy. Whereas in games of chance nature is regarded as a second, fictional player, which chooses its strategies according to the laws of probability, games of strategy model true social interactions. There are different subtypes of games of strategy, which can be distinguished by the way players’ payoff functions are related to each other: in coordination games, players’ preferences coincide; in zero-sum games, players’ preferences are opposed to each other, and in mixed-motive games, players’ motivations lie somewhere between cooperation and competition. Especially the latter offer the opportunity to investigate many phenomena of interest to (developmental) psychologists, such as fairness, reciprocity, and cooperation. As it would be beyond the scope of this paper to review the entirety of game theoretical research, the following sections will offer a summary of the most important research on mixed-motive games, particularly bargaining and social dilemmas [Camerer, 2003; Carnevale & Pruitt, 1992; Colman, 1995; Kagel & Roth, 1995; Komorita & Parks, 1995; Messick & Brewer, 1983]. Bargaining As one would expect, bargaining is of major interest to economists [for an overview, see Roth, 1995]. One game that tries to capture the social situation that realworld bargainers find themselves in is the ultimatum game, introduced by Güth, Schmittberger, and Schwarze [1982]. In the simplest, one-shot case, participants are paired with an anonymous other. The two players have to negotiate the division of a given sum of money (or other material resources). One of the players, the proposer, makes an offer on how to split the sum; the other player, the responder, rejects or accepts this offer. If the responder accepts the offer, the money is split according to the proposer’s suggestion. If the responder rejects, each player receives nothing. According to normative game theory, the rational strategy for the responder would be to accept any offer that is larger than zero, because even getting a small amount is better than getting nothing in the case of rejection. Anticipating the responder’s preferences, the proposer should offer the smallest amount possible to the responder. Real players of the ultimatum game, however, rarely behave according to the game theoretical solution: reviews of several studies by Camerer [2003] and Güth and Tietz [1990] show that the modal and median offers for proposers usually lie at 40–50% of the original sum. Responders rarely reject such offers. Nevertheless, responders reject offers below 20% about half of the time. Dictator games are ultimatum games in which the responder does not have the ability to reject an offer by the proposer, that is, a responder can only accept a proposer’s – the dictator’s – offer [Kahnemann, Knetsch, & Thaler, 1986]. Thus, the normative game theoretical prediction would be that proposers will not offer anything to the anonymous responders but will keep the whole sum of money to themselves. Again, proposers in dictator games do not seem to follow this solution: studies with adults showed that dictators’ average offers fell between 20 and 30% of the original sum with the modal offer being either nothing or half [e.g., Forsythe, Horowitz,

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Savin, & Sefton, 1994; Hoffman, McCabe, Shachat, & Smith, 1994]. Clearly, proposers tend to offer a positive amount to the other player, though not as much as proposers in ultimatum games do. Researchers have interpreted players’ deviations from game theoretic predictions in both games as an indication of their social preferences. That is, supposedly players not only have an interest in maximizing their own payoff but also take into account the other player’s payoff. Because proposers in a one-shot dictator game only interact once with an anonymous other player who cannot reciprocate or punish in a future round of the game, their positive offers have been interpreted as altruistic or have been attributed to their fairness concerns. The comparatively larger ultimatum offers are commonly regarded as being caused both by proposers’ fairness concerns and by their fear that the responders might reject small offers [Takezawa, 2003]. Therefore, in contrast to dictator games, ultimatum offers might be motivated by both other-regarding and strategic considerations. Responders’ rejections of small offers in ultimatum games, on the other hand, have also been attributed to their preference for a fair distribution. Surprisingly, only a handful of studies have investigated developmental differences in the behaviors of proposers and responders in ultimatum and dictator games. We will discuss the findings of these studies and their implications for developmental psychology and economics below. Social Dilemmas According to Komorita and Parks [1995], ‘a social dilemma can be defined as a situation in which a group of persons must decide between maximizing selfish interests or maximizing collective interests’ (p. 190). In general, it is more advantageous for the individual to maximize self-interest, but if every person in the game does so, everybody will be worse off than if every player had maximized collective interest. So, acting economically rationally in a social dilemma can be self-defeating [Parfit, 1979]. Here, we want to discuss research on two types of social dilemmas, the two-person prisoner’s dilemma game and the public goods game. Both games have been extensively studied not only in economics, but also in social psychology [for overviews, see Komorita & Parks, 1995; Ledyard, 1995; Messick & Brewer, 1983; Pruitt & Kimmel, 1977]. The term ‘prisoner’s dilemma’ comes from one illustration of the game given by Albert Tucker in a seminar in the psychology department at Stanford University [Colman, 2003a]. After a serious offense, the police individually questions two criminals. The investigators pose the following dilemma to the two prisoners: if one of them confesses the crime and the other does not, the confessant will get a sentence of 2 years, whereas the nonconfessant will get a sentence of 10 years. If both confess, each of them will be sentenced to 6 years in prison. However, if they both remain silent, they will be sentenced to 4 years in prison. What should the two prisoners do? Clearly, the most profitable strategy for the individual, especially in the one-shot case, would be to confess (i.e., defect), especially when one knows that the accomplice will remain silent (i.e., cooperate). However, if both prisoners follow this defection strategy, they are both worse off than if both had remained silent.

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Although defection is the dominant strategy for the one-shot two-person prisoner’s dilemma (i.e., the strategy that yields the best payoff whatever the other player does), a vast amount of research has shown that even in the one-shot case, many players cooperate to their mutual advantage [see e.g., Colman, 1995; Rapoport, 1989]. Factors that influence cooperation are, for example, pregame communication between the players, and shared or different group identity of the players [Komorita, Hilty, & Parks, 1991; Orbell, van de Kragt, & Dawes, 1988; Witt & Wilke, 1992]. If the game is repeated over several rounds with the same pair of players, a directly reciprocal strategy yields the best results for both players. Axelrod and colleagues [Axelrod, 1984; Axelrod & Hamilton, 1981] demonstrated with the help of computer simulations that the so-called tit-for-tat strategy was the most effective compared to a variety of other (also more complex) strategies and created an evolutionarily stable strategy (i.e., a strategy that, when possessed by an entire population, results in an equilibrium so that any mutation of the strategy can never result in an improvement for the individual). Tit-for-tat involves cooperation on the first trial, followed by the exact reciprocation of the other player’s move on each succeeding trial. Public goods games can be conceptualized as the n-person case of a prisoner’s dilemma. A public good is a service that can be provisioned only if group members contribute toward it (with money or effort), but all members can use it equally, no matter if they contributed or not. Therefore, the individually rational action would be to benefit from the public good, but not to contribute toward it, a behavior that is generally known as free riding. However, if every single group member acts like this, there will be no public good to be distributed and all will be worse off. Because of its similarity to and relevance for real-life decision problems (e.g., environmental pollution, paying fees for public services, taxes), the public goods game has stimulated increasing research in fields as diverse as economics, evolutionary biology, geography, psychology, sociology, and the political sciences [e.g., Elster, 1993; Maynard Smith, 1982; Tsebelis, 2002]. Factors that influence contribution behaviors in public goods games are, for example, group size, criticalness of one’s own contribution, initial endowment or wealth, pregame discussions, and beliefs about the other players [e.g., Bornstein & Rapoport, 1988; Kerr, 1989; Orbell et al., 1988; Rapoport, 1985; van Dijk & Grodzka, 1992]. If a public goods game is played repeatedly over several rounds, players tend to diminish their contributions over time [Isaac & Walker, 1988; Ledyard, 1995]. This breakdown of cooperation can be attributed to the behavior of the free-riding subjects in the group. If the initially cooperating group members realize that others are not contributing, they also decrease their contributions in the subsequent rounds. Fehr and Fischbacher [2003] and Fehr and Gächter [2000] showed that the possibility of punishing free riders does not lead to this breakdown of cooperation in repeated public goods games but keeps cooperation stable. Theoretical Explanations The findings of the economic and social psychological research summarized above make it difficult to believe that maximizing (selfish) expected utility is the one and only motive in human social interaction. Economists have also acknowledged

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this perspective, and several theoretical models have emerged that try to formally include social conceptions or ‘other-regarding’ preferences. In their ERC (equity, reciprocity, and competition) model, Bolton and Ockenfels [2000] asserted that players’ decisions are motivated not only by their own absolute monetary payoff, but also by their relative payoffs, that is, how their own outcomes compare to that of others. Thus, even if one holds a player’s payoff constant, players still strictly prefer an average payoff, which is relative to the number of players in a game. According to Bolton and Ockenfels [2000], players dislike being treated unfairly (i.e., getting less than average), but they will also sacrifice money to help others if they themselves are above the average. Consequently this ‘dislike for being ahead’ will lead players to refrain from taking too much. Bolton and Ockenfels [2000] proved several propositions of what would happen in different games if players have ERC preferences; these propositions match many empirical observations, especially from the dictator and ultimatum game literature. Fehr and Schmidt [1999] also included fairness in their theoretical model. They defined fairness as self-centered inequity aversion – that is, some people do not care about inequity in general, but only when they compare their own payoff with the payoff of other people. Thus, Fehr and Schmidt [1999] assumed that player populations are heterogeneous: some players are purely selfishly motivated and some dislike inequitable outcomes. The type of economic environment determines which player type exerts more influence within the course of the game. In their theoretical formulation of inequity-averse players, Fehr and Schmidt [1999] proposed that players suffer more from disadvantageous inequity than from inequity that is to their material advantage. In contrast to the models of Bolton and Ockenfels [2000] and Fehr and Schmidt [1999], which take into account players’ preferences for different outcomes of a game, Rabin’s [1993] fairness equilibrium model starts with players’ judgments about the reasons for others’ behavior. Rabin [1993] asserted that people do not uniformly show altruistic behavior, but they clearly differentiate between those who have been kind to them and those who have been unkind: people are willing to sacrifice self-interest for the nice guys but will punish the unkind ones. Rabin’s theoretical model includes people’s beliefs about whether the other players are kind to them, and the understanding of others’ intentions for their actions: ‘Player 1’s payoffs do not depend simply on the actions taken, but also on his beliefs about player 2’s motives’ (p. 1285). These beliefs create emotional reactions to the actions of the other player(s), which in turn influence people’s own (fair) behavior. In sum, normative game theory proposes that economically rational agents maximize their expected utility when making both individual and interactive decisions with another rational agent. However, when decision making is studied empirically, ‘real’ people do not seem to follow the assumptions of normative game theory: in social situations, in which people’s decisions can be motivated by both cooperative and competitive considerations, people consistently display behavior that can be interpreted as fair, altruistic, reciprocal – but certainly not ‘rational’ in the classical sense. From our perspective, there are two general ways that economic and developmental psychological research can be fruitfully interconnected, and in the next sections we will elaborate and give examples for both.

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Game Theory Meets Developmental Psychology: Bridging the Gap

As discussed above, economic theories of social preferences try to integrate empirical findings into standard economic theories by creating models that are more psychologically plausible. From our point of view, it is interesting to tease apart the psychological abilities players need to have in order to fit these theoretical models. The ERC model of Bolton and Ockenfels [2000] and the inequality aversion model of Fehr and Schmidt [1999] assume that people have some ‘taste for equality’ and dislike for inequality. According to the theory of Bolton and Ockenfels [2000] players have to be skilled in calculating the average outcome per player and should feel emotional discomfort when their own and others’ payoff does not conform to the average. For players to behave according to the model of Fehr and Schmidt [1999], they should have some knowledge about what constitutes a fair distribution and an (emotional) aversion to allocations they perceive as unfair. Rabin’s [1993] fairness equilibrium model, on the other hand, adopts the perspective that players’ choices also depend on their beliefs about the other players’ intentions for actions. Thus, players in his model need to have a theory of the other person’s mind in order to show prosocial or fair behavior. The main goal of this article is to explore possible connections between economic game theory and psychological research on the social development of children and adolescents, particularly the development of fairness, theory of mind, morality, cooperation, and trust. We are fully aware that performing interdisciplinary work is not an easy task, as different academic fields have their own theories, experimental practices, and methodologies. Furthermore, it is not always transparent how methodologies can cross academic borders. In the next sections, therefore, we explore several ways which show that combining game theory and developmental psychology could lead to a fruitful research agenda. While some of our ideas are firmly grounded, others are more speculative. Needless to say, our ideas are not meant to be exhaustive but rather to illustrate the potential that this multidisciplinary approach holds. One way of interconnecting economic game theory and developmental psychology is to investigate more intensively the psychological competences that are assumed in economic models of social preferences. How children and adolescents judge fair distributions (i.e., their development of distributive justice) and how they come to understand others’ intentions and beliefs (i.e., their theory of mind) have been the topics of extensive research in developmental psychology. Developmental psychologists can provide very useful insight into why some populations act in accordance with the economic models’ predictions and why some groups deviate from these predictions; they can chart the developmental trajectory that gives rise to the behaviors found by experimental economists, and they can investigate the processes by which these behaviors emerge. Just as importantly, based on developmental theories and findings, economists can formulate more detailed hypotheses for testing their theoretical models. In the next section, we will summarize research on the development of theory of mind and fairness expectations and give examples of how psychological studies and insights can be related to economic theories of social preferences. A second approach to interconnecting research in economics and developmental psychology lies in employing economic games as a technique for investigating social development. As outlined above, a game is supposed to model a specific social

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situation or a social behavior, such as reciprocity or altruism. Game theory is a promising and powerful tool that can provide a new experimental methodology to assess prosocial, moral, or reciprocal behavior, thus supplementing traditional psychological measures, such as questionnaires or parent reports. Below, we will outline examples of studies that have used game theoretical methods in a developmental context and discuss possibilities for further research in this area. Economic Game Theory and Theory of Mind Some economic theories stress the importance of understanding others’ intentions and beliefs for (adults’) decision making in economic games [e.g., McCabe, Smith, & LePore, 2000; Rabin, 1993]. Economists, however, have paid very little attention to how these abilities or mechanisms arise, nor examined developmental changes. Developmental psychologists, on the other hand, have long been interested in how children develop an understanding of the desires, beliefs, intentions, thoughts, and feelings of others, known as the theory of mind paradigm [for overviews, see Flavell, 1999; Wellman, 1990; Wellman & Gelman, 1992]. Research in this tradition has investigated when and how children comprehend basic mental states and their knowledge about how these mental states are causally related to each other and to perceptual inputs and behavioral outputs. For the present discussion, we will concentrate on how children develop an understanding of others’ beliefs and intentions. Knowing others’ beliefs plays a major role in comprehending the causes of other people’s actions, and beliefs are central to adults’ explanations of behavior [Saxe, Carey, & Kanwisher, 2004]. By far the most commonly used tests for assessing children’s belief understanding are false-belief tasks [Wellman, Cross, & Watson, 2001; Wellman & Liu, 2004; Wimmer & Perner, 1983], which examine whether children understand that other people will act in accord with their beliefs even when the child knows that these beliefs are incorrect. In the original false-belief task by Wimmer and Perner [1983], the participating child is told a story about Maxi. While Maxi is playing outside, his mother moves a chocolate bar from a green to a blue cupboard. The participant, who knows about the relocation of the chocolate, is then asked in which cupboard Maxi beliefs the chocolate is and to predict where Maxi would look for the chocolate bar. The correct answers to these questions require the child to suppress his or her knowledge of the actual location of the chocolate bar and to pay attention to Maxi’s incorrect belief. Thus, if answered correctly, children have an understanding that representations of reality differ from person to person and that people’s actions are caused by their representations of the world, even when these beliefs contradict the actual reality. In general, 4- to 5-year-old children tend to pass such false-belief tests and 3-year-olds do not, though the precise age of acquisition of false belief can vary depending on individual differences between children (e.g., inhibitory control, number of siblings, or social-communicative experiences) or on the version of the false-belief task used [Flavell, 1999; Jenkins & Astington, 1996; Saxe et al., 2004]. As pointed out by Flavell [1999], it is important for humans to comprehend the concept of intentionality, because ‘it [intentionality] clarifies how people differ from objects; … Second, children must draw the intentional-unintentional distinction to

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understand personal responsibility and morality’ (pp. 34–35) [see also Feinfield, Lee, Flavell, Green, & Flavell, 1999]. One of the earliest investigations of children’s understandings of intentionality is Piaget’s [1965] work on the development of moral judgment. He reported that young children assessed the wrongness of an act mainly by referring to the amount of damage it caused, whereas only older children (8–9 years) included the wrongdoer’s intentions in their judgment. However, subsequent research in both the psychological and moral domain demonstrated that children acquire an understanding of intentions much earlier. For example, in the second year of life infants are able to re-enact an adult’s intended behavior rather than the accidental outcome of the act [Meltzoff, 1995], understand others’ communicative intentions (e.g., pointing) [Behne, Carpenter, & Tomasello, 2005], and differentiate goals from means in others’ actions [Carpenter, Call, & Tomasello, 2005]. By age 4, children seem to have a mental representation of an agent’s intention and can differentiate intentions from other (mental) states, such as desires or outcomes [Astington, 1993; Feinfield et al., 1999]. In the moral domain, Nunner-Winkler and Sodian [1988] demonstrated that even 5-year-olds attribute positive (immoral) emotions to a violator of a moral norm only when the outcome of the action was intended by the violator and not when it happened accidentally. In a study by Núñez and Harris [1998], 3- to 4-year-old children stated the breach of a permission rule in a deontic reasoning task only when this violation was intended by the wrongdoer [see also Leslie, Knobe, & Cohen, 2006]. Although understanding others’ beliefs and intentions is a necessary prerequisite for showing social preferences in an economic game, the economic theories discussed above additionally require that players act according to this information. That is, it is not enough for players to know that the other players have intentions and beliefs, but they themselves have to decide and act on the basis of this knowledge. For example, a player in a prisoner’s dilemma game might think that the other player intends to cooperate and consequently chooses to cooperate as well. This connection between a comprehension of others’ beliefs and intentions and children’s own subsequent behavior has been investigated in developmental studies that examine how children cheat and deceive others [e.g., Chandler, Fritz, & Hala, 1989; Sodian, 1991; Sodian, Taylor, Harris, & Perner, 1991; Wimmer & Perner, 1983]. For example, Sodian [1991; Sodian et al., 1991] demonstrated that while 2- to 3-yearold children use deceptive strategies to mislead another person, they do so in a rather arbitrary fashion, without taking the other’s beliefs or motivations (i.e., the other person is a competitor vs. a collaborator) into account. In contrast, by 4 years of age, children use very sophisticated deceptive strategies, employ them depending on the motivation of the other person, and can also explain the effect of their deceptive strategies on the behavior of the other. Sodian et al. [1991] suggest that developmental changes in deceptive behavior parallel theory of mind development, particularly false-belief understanding: ‘children increasingly appreciate a key feature of both false beliefs and deceptive ploys, namely, that they each describe a situation that in reality does not exist’ (p. 480). Some studies in experimental economics and cognitive psychology have investigated Rabin’s [1993] proposed relationship between ‘mind reading’ and (fair) behavior in games. However, most of them did not assess players’ mind-reading abilities independently, for example, with a theory of mind task, but inferred them directly from players’ behavior in the game. Hedden and Zhang [2002; see also Colman,

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2003b; Zhang & Hedden, 2003] demonstrated that adult players of sequential-move games develop mental models of the other player’s strategy and, to a certain extent, adapt this model in response to the other player’s behavior. Taking the other’s intentions into account helps players maximize their payoff in these games. In studies by Falk, Fehr, and Fischbacher [2003] and Nelson [2002], responders in an ultimatum game differed in their acceptance and rejection of identical numerical offers depending on the available alternative offers. For example, responders accepted an unfair offer by the proposer if the alternative offer would have been even more unfair, but rejected the same offer when the proposer had the choice of allocating more fairly. Similarly, in a study with elementary school children, adolescents, and university students, Sutter [2003] found that all responders of ultimatum games take the perceived intentions of the proposer into account and accept an unfair offer if there is no other, fairer option. However, children and adolescents also reject unequal offers more often than university students, independent of the possible other options, thus indicating that they judge an ultimatum game offer not just by its intention but also by its outcome. To our knowledge, only one study so far has explicitly related psychological research on theory of mind and economic research on social preferences. Sally and Hill [2006] investigated normally developed 6- to 10-year-olds and same-aged children formally diagnosed with autistic spectrum disorders (ASD). Participants played 16 rounds of a prisoner’s dilemma game with a confederate player and a computer opponent and one-shot dictator and ultimatum games. Moreover, participants’ firstand second-order belief understanding was measured. Results showed that participants who passed the second-order false-belief task cooperated significantly more in the prisoner’s dilemma game than participants who did not pass. Furthermore, participants with ASD or those who did not pass the second-order false-belief task tended to make lower offers in the ultimatum game, whereas the majority of participants who passed the second-order false-belief task offered half. Concerning their behavior as responders in ultimatum games, both children from the youngest age group and participants with ASD accepted small offers more readily than older participants. The work by Sally and Hill [2006] supports Rabin’s [1993] proposition that the ability to understand others’ beliefs is related to cooperative and fair behavior in economic games. In our opinion, it also represents a first successful step in connecting theory of mind research and experimental economics, and both areas would benefit from a further strengthening of this interconnection. For developmental psychology, game theoretical studies can provide a context in which a ‘theory of mind in action’ can be investigated experimentally. For example, does children’s knowledge of others’ intentions influence whether they cooperate in social dilemmas? Warneken and Tomasello [2007; Warneken, Chen, & Tomasello, 2006] showed that 18- and 24month-old children tended to cooperate to a medium to high degree with an adult in simple games (e.g., bouncing a ball on a small hand-held trampoline), whereas cooperation in 14-month-old children was rather low. According to the authors, cooperative activities require the ability to coordinate one’s own and others’ goals to achieve a shared aim, which children tend to acquire around 14 months of age. It is an open question whether similar abilities are required for cooperation in experimental games, and future research studies could investigate when and under what conditions children can translate their understanding of others’ minds into cooperative actions in economic games.

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Economic Game Theory and the Development of Distributive Justice In contrast to Rabin’s [1993] fairness equilibrium model, other theoretical explanations of social preferences [e.g., Bolton & Ockenfels, 2000; Fehr & Schmidt, 1999] in economics attest that fair and cooperative behavior in economic games is influenced by people’s tendency to pay attention to the fairness of outcomes for oneself and others. In these theories, fairness is largely equated with equality. Players in an economic game, so the theory goes, try to avoid unequal outcomes for themselves or others. In psychology, people’s fair behavior and their reactions to fairness and unfairness have been investigated in justice research. Montada [2003] differentiates three broad domains in which justice plays a critical role: distribution, social exchange, and retribution. Since particularly the first two – distribution and social exchange – are related to conceptions of fairness in experimental economics, we will discuss them in more detail. Distributive justice research investigates how people allocate material and symbolic goods and how they reason about these distributions. Three major norms of allocations can be differentiated: equality (equal shares for all people in the same position); equity (allocation according to achievements or contributions), and allocation according to needs. According to Deutsch [1975, see also Barrett-Howard & Tyler, 1986], the choice of one of these distributive justice principles depends on the goals of the decision maker. If people are trying to achieve economic productivity, they should use equity as an allocation principle, because this would motivate recipients to give their best. However, if people are pursuing the goal of harmonious social relationships, they should refer to equality, and people who aim to foster personal growth and welfare should consider other people’s needs. Studies on the development of distributive justice behavior and reasoning in children have investigated whether some distribution principles are more dominant or regarded as more or less fair at certain ages. In this research tradition, children are asked to distribute rewards to hypothetical members of a group who have worked together on a task and who differ with respect to certain features (e.g., effort put into the task, age, need). Early research on the development of distributive justice [e.g., Damon, 1975, 1977; Enright et al., 1984] found distinct developmental differences in the way children and young adolescents make allocations and reason about them. Preschool children share according to salient characteristics of the group members (e.g., age, gender, size), 5- to 7-year-old children distribute resources according to equality, and older elementary school children employ equity norms for their allocations. From age 8, children consider the neediness of group members, and from late childhood onward, children coordinate different allocation norms depending on the situational context. Results from other studies, however, do not support this strict developmental sequence of justice allocation and reasoning. Huntsman [1984] found that even preschool children could reason in terms of neediness and effort and that equality remained an important norm in the allocations of older children. In a study by Sigelman and Waitzman [1991], equality was an important distribution norm in kindergarteners, fourth graders, and eighth graders alike, but the older participants were more likely to adapt their allocation decisions and reasoning to the situational context. Similarly, McGillicuddy-De Lisi, Watkins, and Vinchur [1994] observed that

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the distributions of elementary school children, but not kindergarteners, varied depending on whether they were allocating rewards to friends or strangers. These studies thus indicate that rather than following a strict developmental sequence, especially older elementary school children apply distributive justice norms in accordance with the properties of the situation. One distribution norm that has gained particular attention is equity. Equity theory of distributive justice [e.g., Adams, 1965; Walster, Berscheid, & Walster, 1978; Walster & Walster, 1975] posits that people will regard a distribution as fair when there is proportionality between inputs (e.g., effort, invested time, performance) and outputs (e.g., rewards, benefits). People will feel angry when their inputs exceed their outputs, but they also feel uneasy when they benefit more than they have contributed [Montada, 2003]. Studies investigating equity theory with children and adolescents typically use tasks that ask participants to distribute rewards to people depending on their inputs. In their review of the developmental literature, Hook and Cook [1979; see also Keil & McClintock, 1983; Zinser, Starnes, & Wild, 1991] found that only adolescents and adults allocate rewards according to strict proportional equity (everybody gets according to their inputs) as predicted by equity theory. Preschoolers and young elementary school children distribute rewards according to self-interest (i.e., give self more than others independent of input), whereas elementary school children and young adolescents tend to use equality and ordinal equity (i.e., the one who contributed more should get more, but no strict proportions are calculated) as allocation criteria. The development of cognitive abilities, particularly logico-mathematical competencies (e.g., the ability to calculate ratios), is believed to underlie this developmental sequence, since allocations according to proportional equity require participants to consider the relative relationship of inputs to outputs, the total available outcome, and the number of people among whom the outcome is distributed. Hook and Cook [1979] found that the development of equity allocations generally corresponds to Piaget’s [1965] stages of cognitive development. That is, preoperational children distribute rewards according to self-interest, and concrete-operational thinkers according to ordinal equity; people reasoning in terms of formal operations prefer proportional equity allocations. However, subsequent research with Asian children and adolescents provided evidence that the developmental sequence of equity judgments is also influenced by social developmental factors. In a series of studies, Singh and colleagues [Sin & Singh, 2005; Singh & Huang, 1995; Singh, Chong, Leow, & Tan, 2002] demonstrated that Chinese children and adolescents adjust their outcome allocations in concord with the Asian social value of maintaining group harmony, with younger children making more equitable and adolescents more equal allocations. In contrast, in Western cultures, cognitive developmental factors, such as the ability to calculate proportions, go hand in hand with the understanding of the social value of ‘each according to his merit,’ which consequently leads to an increase in equity judgments over the course of development. These studies critically highlight the importance of social and contextual factors for children’s and adolescents’ allocations.

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Connecting Game Theory and Developmental Psychology Developmental research on distributive justice has the potential to contribute important insights to the conceptualizations of fairness in experimental economic research, and vice versa. Many economic games are based on a distribution of resources between players, and particularly the ultimatum and dictator games have been specifically developed to measure people’s fairness preferences. Both games share similarities with measures used in distributive justice research. We believe that the attractiveness of the ultimatum and dictator games for assessing fairness development stems from what differentiates them from most psychological measures of fairness and distributive justice. First, in both games, decisions are real: players distribute real resources (such as money or candy) between themselves and the other player and are paid according to their decisions. In contrast, most distributive justice studies have used hypothetical scenarios, and therefore people’s decisions have no real consequences, either for themselves or for others. Economic games present a context in which the outcomes of decisions matter, because players keep or lose valued resources, and consequently they might be more similar to children’s, adolescents’, and adults’ decisions and experiences with fairness in real life. Investigating distributive justice development with economic games might therefore be a more valid indicator of children’s real-life allocation behavior. Second, in many economic game situations, the players have little or no information about their partners (such as the other’s age, gender, neediness) and interact anonymously. Economic games thus present an interesting baseline condition. How participants ‘construct’ the situation and the other player and on what kind of characteristics and factors they base their decisions might, for example, depend on what kind of distribution norm (which changes with age) they regard as important. As pointed out above, it is thought by some that fairness norms underlie players’ allocation decisions in ultimatum and dictator games, and economists consider equality as the main fairness norm motivating nonselfish allocations in economic games. However, our review of the social and developmental psychological literature reveals that, depending on age, the framing of the situation, and sociocultural factors, other distributive justice norms might affect allocations in economic games. There are several possible ways these psychological findings can be connected with economic research. One option would be to investigate the allocations of children and adolescents of different age groups in dictator and ultimatum games and independently examine their distributive justice reasoning. Based on developmental psychological research [e.g., Damon, 1977; Hook & Cook, 1979] we would expect that children of different ages would regard certain allocation norms (i.e., equity, equality, need) as more or less fair, and that their level of distributive justice reasoning would influence their allocation choices. A number of studies have examined developmental differences in children’s and adolescents’ decisions in ultimatum and dictator games. However, most of them were conducted by economists and thus have usually not examined what other psychological variables, such as justice concepts, might influence behavior in these games. Moreover, the different age groups investigated in these studies seem to have been chosen mainly according to convenience and not according to any developmental psychological criteria.

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Murnighan and Saxon [1998] compared the behavior of children from kindergarten, third grade, sixth grade, ninth grade, and university undergraduates in ultimatum games with complete and incomplete information. In the incomplete information condition, responders did not know the amount the proposer was dividing; in the complete information condition they did. More than half of the third graders offered exactly half in both conditions and accepted only 50/50 splits as responders. Interestingly, they even rejected offers that gave them more than 50% of the sum (in complete negation of economic theories). Third graders offered less than sixth graders (in study 1), and sixth graders also offered more than ninth graders and university students (in study 2). Furthermore, kindergarteners accepted 70% of the smallest possible offers by proposers and thus were less likely to reject than the older participants. Harbaugh, Krause, and Liday [2000] studied the bargaining behavior of children from second, fourth/fifth, and ninth grade in ultimatum and dictator games. Second graders as proposers offered less than the older children, but only in the ultimatum game was there a linear increase of offers with age. In the dictator game, the fourth/fifth graders offered more than both second and ninth graders. As responders, second graders rejected offers significantly less often than older children. Gummerum, Keller, Takezawa, and Mata [2008] and Takezawa, Gummerum, and Keller [2006] investigated the behavior of German third, sixth, eighth, and eleventh grade students in dictator and ultimatum games in relation to their independently assessed preferences for a fair distribution and level of moral reasoning. Participants decided both as individuals and groups of three. Even though the results of these studies showed no age differences in the individual allocations in either game, participants’ fairness preferences influenced the individual sharing behavior in both games; the more participants preferred an equal distribution, the more they shared equally in the games. Overall, these studies indicate that bargaining games provide an interesting new approach to measure children’s and adolescents’ fair behavior. Future research might want to shed more light on the inconsistent age trends found for dictator game and ultimatum game allocations by, for example, not just relating offers in these games to justice reasoning but to other cognitive abilities, such as logico-mathematical reasoning [Hook & Cook, 1979]. Furthermore, the relationship between fair behavior in economic games and behavior in real-life situations should be explored. Another option to connect economic and developmental research would be to investigate how the framing of the experimental situation affects which distributive justice principle children regard as appropriate. Economic studies found that adults make smaller offers when the ultimatum game situation is framed as a buyer/seller exchange [Hoffman et al., 1994], and that dictators’ offers become more selfish when the social distance between players increases [Hoffman, McCabe, & Smith, 1996]. Previous developmental psychological research [e.g., McGillicuddy-de Lisi et al., 1994] would suggest that such contextual factors should influence the allocation behavior of elementary but not of preschool children in bargaining games. By systematically manipulating contextual and relational factors, economic games, such as the dictator and ultimatum games, could be interesting tools for teasing apart what kind of information motivates children’s and adolescents’ distributive justice allocations and judgments.

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People’s sociocultural background provides another frame for interpreting the fairness of an allocation. A comprehensive cross-cultural study of players’ behavior in small-scale societies by Henrich et al. [2005] found a great between-culture variation of ultimatum game offers and rejections. These variations could be explained by sociocultural factors such as the degree to which economic life in the respective societies depends on cooperation and the frequency with which people typically engage in market exchanges. Often participants spontaneously framed the experimental situation in terms of a typical exchange situation in their respective culture and based their allocation decisions on how people typically behave in these settings. Hoffman and Tee [2006] demonstrated that Chinese adolescents made higher offers as proposers in the ultimatum game than same-aged peers from Western societies but showed a similar tendency to accept smaller offers as responders. This cultural difference is supported by findings from Zhu, Keller, Chen, Mou, and Wang [2007], who found that Chinese children and adolescents allocated significantly more in the dictator game than their German counterparts. The results of these studies fit well with earlier cross-cultural studies that have shown more prosocial behavior and more advanced moral reasoning in Asian compared to Western children [e.g., Keller, Edelstein, Schmid, Fang, & Fang, 1998]. Stevenson [1991] pointed out that Asian conceptions of prosocial behavior are rooted in the moral philosophy of Confucianism, which assumes that human beings are intricately linked to social groups. Prosocial and moral behavior are major educational concerns in Asian societies and their development is heavily promoted in school (e.g., in school textbooks, organization of classroom interaction). It would be very interesting to conduct further and more comprehensive cross-cultural studies with children and adolescents to investigate how the economic arrangements and the social and justice values of their society influence their behavior in economic games. Game situations can be easily manipulated in terms of the number of decision makers, the decision strategies each player has, the possible outcomes, and the amount and kind of information that players have about each other. For example, do allocations in the dictator and ultimatum games differ depending on the kind and the amount of resources to be shared? It might be that proposers are more generous when the monetary payoffs for players are relatively negligible. Even though economic studies with adults have shown little evidence that stake levels influence offers in the dictator game [e.g., Cameron, 1999; Forsythe et al., 1994], the relationship between type and amount of resources, offers, and participants’ age has yet to be systematically explored. Economic Game Theory and Justice in Social Relations Justice in social relations deals with exchanges between individuals, groups, and institutions [Montada, 2003]. One way of formalizing these exchanges is through contracts. Although legal regulations have been established for many exchange relationships specifying the rights and duties of the partners, most of the exchange relationships we experience in our daily lives are not regulated by laws but by social contracts and norms, such as reciprocity [Gouldner, 1960]. Such implicit social contracts relate benefits to costs and therefore express a social exchange in which an individual is required to reciprocally pay a cost when he or she has received a benefit.

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Cosmides [1989] and Cosmides and Tooby [1992] empirically investigated the hypothesis that the human mind is designed to keep track of the reciprocal provision of benefits in social interactions and to detect violations of these implicit social contracts. They claim that humans have evolved a cheating detection module that helps them pay attention to whether the exchange partner has paid her costs when she collects her benefits and to cooperate selectively only with noncheaters. In a series of experiments, Cosmides and colleagues [Cosmides, 1989; Cosmides & Tooby, 1992] demonstrated that if the classical selection task by Wason and Johnson-Laird [as cited in Cosmides, 1989] is framed as a social contract, up to 75% of adults are indeed sensitive to information that might indicate cheating in social exchanges. Developmental research found that children come to understand the norm of reciprocity by 5–6 years of age [Berndt, 1977; Youniss, 1980]. Elementary school children rate reciprocity as a good strategy for determining whether to help another peer [Suls, Witenberg, & Gutkin, 1981] and know that a help-seeker feels indebted after receiving help [De Cooke, 1992, 1997]. Concerning children’s understanding of social contracts, Keller, Gummerum, Wang, and Lindsey [2004] found that even preschool children recognize the violation of social contracts with bilateral cheating options when they are given all the relevant information. This finding is in line with other research on the development of understanding of rule violations in social contexts [e.g., Girotto, Blaye, & Farioli, 1989; Harris, 2000; Harris & Núñez, 1996]. However, elementary school children have difficulties in deciding on the relevant information that might indicate contract violation (or a violation of reciprocity) in the Wason selection task. These findings indicate that although even very young children implicitly understand the violation of reciprocity, in the course of development they might become better able to explicitly comprehend what kinds of acts constitute reciprocal exchanges, and the feelings related to the fulfillments and violations of such social contracts. Reciprocity also plays an important role in creating and sustaining cooperation in repeated social dilemmas, such as prisoner’s dilemmas and public goods games. Theoretically, psychological studies on children’s understanding of reciprocity and their reciprocal behavior can reveal to experimental economics researchers what kind of information motivates children of different age groups to act in a reciprocal manner in these games. However, many developmental studies on behavior in social dilemmas [e.g., Fan, 2000; Harbaugh & Krause, 2000; Matsumoto, Haan, Yabrove, Theordorou, & Carney, 1986; Sally & Hill, 2006] typically only investigate whether children’s behavior becomes more or less cooperative over repeated rounds of the game and not whether players employ reciprocal strategies; age effects concerning cooperation are inconsistent. Whereas Fan [2000] found higher proportions of cooperation in older compared to younger elementary school children in a repeated prisoner’s dilemma game, Harbaugh and Krause [2000], and Sally and Hill [2006] reported that older children decreased and younger children increased their amount of cooperation in later rounds of public good and prisoner’s dilemma games. Unlike in these studies, Gummerum, Takezawa, and Keller [submitted] directly investigated age effects in children’s reciprocity in a sequential prisoner’s dilemma game. They found that sixth graders reciprocated significantly more than children from second grade, but that both reciprocated less than adults in the same game. Future research in this area should thus continue to investigate the boundary conditions for reciprocal behavior in children and adolescents in these games, its develop-

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mental course, and its relation to other (social-) cognitive abilities. For example, studies could investigate whether direct reciprocity becomes more prevalent with age, and whether and how this behavior is related to children’s understanding of the norm of reciprocity, their comprehension of (bilateral) contracts, and the emotional consequences caused by violations of reciprocity. Research on the ‘happy victimizer’ phenomenon [e.g., Arsenio & Kramer, 1992; Keller, Lourenco, Malti, & Saalbach, 2003; Nunner-Winkler & Sodian, 1988] has shown that even though young children consider the violation of moral norms (e.g., stealing, not helping) as wrong, they still attribute positive feelings to the violator if he or she can achieve a personal goal through the violation. According to this research, morally appropriate (negative) emotional attributions in a situation in which a protagonist gives priority to a personal desire instead of the moral rule forbidding it can be seen as an indicator of children’s internalization of moral norms and their motivation to comply with them, independent of their understanding of moral rules. It would be interesting to investigate whether children who understand the norm of reciprocity and who attribute negative emotions to a violator of this norm also show more reciprocal behavior in such games as the prisoner’s dilemma. Anticipating the emotions of violators of (moral) norms requires children to have some knowledge of how both victim and violator would typically feel in such a situation. According to Arsenio and Lover [1995], such ‘affect-event’ links are based on children’s own experiences with (im-)moral events. To our knowledge, there is little research on children’s emotional reactions to fair and unfair, reciprocal and nonreciprocal behavior. We would expect that developmental differences in what constitutes a fair division or reciprocal behavior would also influence the frequency and intensity of children’s emotional reactions to others’ behaviors in games. These reactions could be studied, for example, when participants are faced with an unfair offer as a responder in an ultimatum game or with nonreciprocal behavior in a prisoner’s dilemma game. Research such as this might help us understand the inconsistent age trends concerning cooperative behavior in games as well as the role that knowledge of moral rules and moral emotions plays for reciprocal and cooperative behavior. Economic Game Theory and the Development of Prosociality and Morality Games like the dictator game cannot only be employed to measure the development of distributive justice, but additionally resemble measures of prosociality and morality used in developmental psychological studies. In the dictator game, one player, the proposer or dictator, can unilaterally decide how to allocate (or not) resources between himself and another anonymous player, the responder. The game is played only once so that it is impossible for the responder to reciprocate or punish the dictator. Consequently, every positive offer to the responder can be seen as an indication of prosociality on the side of the dictator [Camerer, 2003; Colman, 1995]. As pointed out by Eisenberg and Fabes [1998, p. 774], ‘there has been little consensus on whether or not there are age-related changes in the development of prosocial tendencies.’ Part of the difficulty in finding developmental trends for prosocial behavior might be that this behavior is operationalized differently in different age groups. The strength of utilizing economic games, such as the dictator game, as a measure for

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prosocial behavior lies in the fact that the same instrument can be consistently used across age groups, which would make age comparisons more meaningful. In the dictator game, the dictator is faced with a prosocial moral dilemma [Eisenberg, 1986, 2000], namely, the choice between his or her selfish desires to keep as many resources as possible and the needs of the other player. Developmental psychological studies usually present children with such dilemmas and assess their reasoning about possible solutions through interviews. This research has demonstrated that young preschool children predominantly use hedonistic or (primitive) needsoriented reasons and that by late elementary school children increasingly refer to stereotypic reasons for being a good or bad person or to pragmatic or approval-oriented reasons. Internalized affective reasons (e.g., guilt, positive affect when helping), self-reflective sympathy, role taking, and reasons referring to internalized norms and values only emerge in late childhood, whereas reasons for prosocial behavior that deal with generalized reciprocity, concerns with society, rights, and justice are only used by adolescents [Eisenberg 1986; Eisenberg, Carlo, Murphy, & Van Court, 1995; Eisenberg, Lennon, & Roth, 1983; Eisenberg, Miller, Shell, McNalley, & Shea, 1991]. Economic games such as the dictator game can provide a fascinating perspective on and insight into children’s and adolescents’ decision making and behavior in prosocial moral dilemmas. Most of the psychological research on moral development [for an overview, see Turiel, 1998] has focused on the development of moral reasoning while spending far less energy on its relationship with moral behavior. Assessing children’s and adolescents’ decisions in the dictator game and simultaneously examining their reasoning and justifications for these decisions could offer an interesting opportunity to enhance our knowledge of the relationship between moral reasoning and action. The studies by Gummerum et al. [2008] and Takezawa et al. [2006] present an example of how children’s and adolescents’ allocation behavior in the dictator game can be connected to their moral reasoning abilities. They let third, sixth, eighth, and eleventh grade students distribute money in a dictator game either as individuals or as groups of three. Including the group condition made it possible to compare individual and group decisions as well as to examine the group decision-making process and arguments used for certain offers during the group discussion. Additionally, participants’ level of moral reasoning and their fairness preferences were assessed independently in a questionnaire. The results showed that the level of moral reasoning did not predict the individual sharing decisions of the participants in the dictator game. However, during the group discussion for the dictator game, group members with a higher moral reasoning ability were more influential in persuading the others and in determining the group’s decision. Hence, it seems that the level of moral reasoning increases the social influence of group members and helps them defend their own convictions and preferences. Keller and Canz [2007] examined the arguments participants of this study made during the group discussions in the dictator game to support or persuade other group members. They found that participants used a variety of different reasons to support their distribution choices. Whereas the youngest students from third grade mainly referred to simple distribution principles such as fairness or selfishness, the reasoning of the older participants was more complex: sixth graders used the concrete needs of self and others to argue either for or against an equal allocation of re-

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sources; eighth grade participants justified their choices by referring to fairness and reciprocity norms or, in the case of unequal distribution, by referring to simple excuses and justifications. These justifications in the cases of norm violations became even more sophisticated among students from eleventh grade, who used, for example, negative stereotypes about the other group. Moreover, Keller and Canz [2007] found that group discussions varied developmentally in complexity of argumentation. Participants in the youngest age groups did not justify offers at all or used moral and fairness norms only superficially. Young adolescents defended their offers by referring to the psychological or social circumstances of the situation. Only older adolescents and young adults justified offers with normative or meta-normative considerations. In a follow-up study, Keller, Canz, Gummerum, and Takezawa [in press] let participants of the same four age groups allocate money under full anonymity. In this situation, neither the experimenter nor the recipient would ever know how much each participant had allocated as a dictator. Participants were not just asked for their dictator game offer, but also for a moral judgment about the right offer in this situation. Real dictator game offers showed no statistical differences between age groups; the modal offer was the equal split. Concerning moral judgment, between 80 and 90% of the participants judged the equal split as the morally right offer. However, among participants from eleventh grade, a salient gap between offer and moral judgment occurred. Fifty percent of them gave about three coins less than what they judged to be right. Keller and Canz [2007] interpreted this finding in terms of social rationality – only the oldest participants may have understood that the conditions of the experiment allowed deviation from the norm without risking sanctions. Younger participants may be more naïve and therefore more apt to follow rules. Overall, these studies show that experimental settings such as the dictator game provide a stimulating situation for children’s moral reasoning and their behavior. Adapting the original economic dictator game (e.g., by measuring groups’ decision making, participants’ moral reasoning, or their emotions) provides a rich context for research on children’s moral behavior and reasoning. Economic Game Theory and the Development of Trust The concept of trust is regarded in both economics and psychology as one of the foundations of human interaction and cooperation. Cooperation and trust have been investigated in economic game theory in the context of social dilemmas, particularly the prisoner’s dilemma. When prisoner’s dilemmas are played sequentially, they can measure trust on the side of the first player. If the first player decides to cooperate, he or she trusts that the second player will reciprocate with cooperation and not with deception. This basic setup is incorporated in the trust or investment game [Berg, Dickhaut, & McCabe, 1995], in which a first player decides on how much of an initial show-up fee he or she wants to send to an anonymous second player. Any amount sent is tripled and added to the account of the second player. The second player then decides how much he or she wants to send back to the first player, and any amount is tripled and added to the resources of the first player. The amount that the first player initially sends to the second player can be regarded as a measure of the first player’s trust: if he or she does not trust the second player to return any re-

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sources, then the first player will not send anything. But first players who send money must trust that the second players will return resources to them, thereby showing their trustworthiness. As Berg et al. [1995] and Camerer [2003] point out, the decision of the first player to send any amount is risky and possibly against his or her self-interest if the second player does not reciprocate. In their original experiment, Berg et al. [1995] found that only 2 of 32 first players did not give anything to the second player, but there was high variability in the amount sent. Most second players reciprocated the first players’ trust, but on average, second players returned slightly less than the first players had sent them. Hence, the first players’ trust was not quite repaid by the second players. Numerous experiments [e.g., Bolle, 1995; Dufwenberg & Gneezy, 2000; Ortmann, Fitzgerald, & Boeing, 2000] have replicated the basic findings of Berg et al. [1995]. One factor that seems to influence both trust and trustworthiness in this game is culture [e.g., Buchan, Croson, & Dawes, 2002; Kiyonari, Yamagishi, Cook, & Cheshire, 2006]: Americans tend to be more trusting, but less trustworthy in this game than Japanese participants. Kiyonari et al. [2006] explain this cultural difference by referring to the concept of ‘self-responsibility’ in the United States (i.e., ‘every man is the architect of his own fortune’). Concerning developmental effects, studies by Harbaugh, Krause, Liday, and Vesterlund [2002] with 8- to 17-year-olds and Sutter and Kocher [2005] with children, adolescents, undergraduate students, working professionals, and retired adults indicated that both trust (amount sent by the first player) and reciprocity (amount resent by the second player) increase with age. However, trust as measured in the trust game was not predicted by psychological measures of trust in studies with US undergraduates and members of a religious congregation in Tanzania [Danielson & Holm, 2007; Glaeser, Laibson, Scheinkman, & Soutter, 2000]. The lack of relationship between these measures might be explained by the difference in conceptualizations of trust in psychology and economics. In developmental psychology, interpersonal trust has been defined and explored in various forms [for a comprehensive overview, see Bernath & Feshbach, 1995]. Rotenberg and colleagues [Rotenberg, 1991; Rotenberg et al., 2005] differentiate between three different bases of trust, namely, reliability (fulfillment of promises, behavioral consistency), emotional trust (relying on others to refrain from causing emotional harm), and honesty (telling the truth). These bases of trust can be investigated in two domains, a cognitive/emotional domain, which is concerned with people’s attributions about trust, and the behavioral domain, which is related to people’s behavioral tendencies to rely on others. One comprehensive developmental approach that has predominantly investigated the cognitive/emotional domain of interpersonal trust is research on the development of children’s friendship cognitions [e.g., Bigelow & La Gaipa, 1975; Selman, 1980; Youniss, 1980]. For young children, trust seems to pertain to a friend’s physical rather than psychological abilities; for example, children trust their friends to play and be nice to them and to satisfy their own egocentric needs. Elementary school children emphasize the reciprocal aspects of trust between friends: trust emerges in the context of symmetrical or reciprocal cooperation between friends and children trust that friends reciprocally fulfill each others’ selfish needs. In late childhood and early adolescence, trust becomes one of the defining characteristics of a close and intimate friendship in which friends share their innermost feelings and

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are committed and loyal to each other. Finally, adolescents view trust as the ability to have close, but still autonomous friendships: even though the relationships between friends are still regarded as close and as providing important emotional support, at the same time they are characterized by a reduction in the exclusivity between friends. Rotenberg and colleagues [Rotenberg, 1991, 1995; Rotenberg et al., 2005; Rotenberg, MacDonald, & King, 2002] investigated the relationship between the cognitive/emotional and the behavioral domains of interpersonal trust. They found that 10-year-old children’s beliefs about reliability, honesty, and emotional trust were related to prosocial behavior as judged by classmates of the participants. However, elementary school children’s generalized trust beliefs in peers or parents, which mainly entail beliefs about another’s honesty, were not related to their cooperative behavior with peers or parents in a simultaneous prisoner’s dilemma. Especially these last studies indicate that the behavior measured in economic trust games may only be related to certain bases of trust, such as reliability, but not honesty. There are several ways in which a connection between economic and psychological research could further our understanding of the concept of trust and its development. First, trust games are an excellent instrument to obtain a quantitative indicator of a person’s trust and trustworthiness, and previous research has indicated that it can be successfully used with elementary school children [Gummerum et al., submitted; Harbaugh et al., 2002; Sutter & Kocher, 2005]. Second, we believe that trusting behavior in the trust game might be particularly related to players’ conceptions of the other person’s reliability (i.e., his or her behavioral consistency). What cues do children use to establish another’s reliability? Harris and Koenig [e.g., Harris, 2007; Koenig & Harris, 2005] have shown that children as young as 4 years old (and 3-year-olds, to some extent) monitor the accuracy of messages and selectively trust informants who have been correct in the past. Matsumoto et al. [1986] found that preschool children use others’ emotional reactions to decide whether to trust and cooperate in a simultaneous prisoner’s dilemma game. Furthermore, dyads who reached a cooperative solution also exhibited a higher group orientation (i.e., finding a solution that is good for the dyad as opposed to the self alone) and were more likely to consist of close friends. Future studies might further examine how children’s judgments of others’ trustworthiness and reliability depend on their concepts of persons and relationships and their ability to decode others’ emotional cues. Conclusion

Game theory has been one of the most influential social theories of the 20th century. It has been extensively used in economics to experimentally investigate people’s social behaviors, such as fairness, cooperation, prosociality, and trust. Few developmental psychologists, on the other hand, have incorporated game theory into their theories or experimental designs. This paper’s aim has been to establish a link between game theory and developmental psychology to allow for a more comprehensive and multidisciplinary perspective on social development. With this work we have tried to show that a combination of the two approaches to social behavior is not only warranted but also possible and beneficial. Research in experimental economics could certainly gain from integrating a psychological perspective, a point that

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economists have already acknowledged [Camerer, 1997, 2003]. Developmental theory and research can provide useful and important insights concerning the abilities needed to act in a cooperative, fair, or prosocial way in economic games, how these are acquired and change over ontogenetic development, and the role of societal and maturational influences on this process. On the other hand, game theory offers an exciting and new methodological avenue to experimentally investigate some pressing questions in psychological research on social development, particularly on moral and prosocial behavior. What is the connection between reasoning and action? What are the common structural features of situations in which adults and children cooperate? Are there ontogenetic changes in the expression of certain social behaviors? Game theory, as we mentioned earlier, has found applications outside the realm of economics, establishing itself as an important methodological tool in biology and anthropology. Within these areas, for example, game theory is used to model the process by which frequencies of certain strategies (e.g., cooperation, defection) change in a population and how this affects the population’s fitness [e.g., Maynard Smith, 1982]; it has also been used to examine the altruistic or fair behavior of nonhuman players (mostly nonhuman primates) [Brosnan, 2006; Jensen, Call, & Tomasello, 2007; Silk et al., 2005]. In our opinion, the strength of using a game theoretical approach to investigate social behaviors, such as prosociality and cooperation, lies in the fact that the same experimental instrument (i.e., a particular game) can be used across age groups and lines of inquiries (e.g., concerning the ontogenetic and phylogenetic roots of certain social behaviors). This maximizes the ability to draw meaningful comparisons across species, across the lifespan, and also across cultures, a task that has rarely been taken on in a unified and systematic manner. Developmental psychology, without doubt, has much to contribute to these important questions and this paper should be seen as an invitation to developmental psychologists to contribute to this ongoing endeavor.

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