Ingroup Bias in Utility Maximization at MHC: A Game Theoretical Analysis of Ingroup Bias in a Dictator Game at Mount Holyoke College

Abstract

Game theory predicts that, in a dictator game, players will behave selfishly: they will try to maximize their utility by keeping all of the money given to them for allocation. However, experimental data has demonstrated that behavior often deviates from this outcome. Instead of keeping all of the money (i.e. $10) that is available for allocation, players tend to split the money with their passive recipients – player two – when they can keep all and give nothing. One explanation provided is ingroup bias, and this thesis highlights the appearance of this type of preferential treatment at the Mount Holyoke College campus. The paper analyzes how Mount Holyoke College students allocate money between Mount Holyoke students and Amherst students to show that there is ingroup bias on campus that causes them to favor Mount Holyoke recipients more than Amherst. The paper also delves deeper into why ingroup bias exists.