Environmental and social uncertainty in single-trial resource dilemmas

Abstract

Considered in this paper is a class of social dilemma situations in which subjects are instructed that there is a certain amount of money, x, that can be made available to them collectively and all they have to do is to request, individually and anonymously, how much money they, as individuals, want. If the total amount requested collectively by the group members does not exceed x, each member gets what he or she requested. Otherwise, no one receives anything. The amount x is a realization of a random variable drawn from a probability distribution whose parameters are common knowledge. The number of members in the group is known. How much money should each group member request? Taking an individual decision-making approach — where beliefs about requests of the other group members are modeled by subjective probabilities — we provide a general solution to the problem, which is experimentally testable, when requests of the other group members (i) are known or (ii) are not.