Decisions Based on Receiver Knowledge of Advice: An Extension of the Dictator Game

This paper explores the effect of the observability of advice in decision-making. Specifically, in an extension of the dictator game, advice is introduced to the dictator in the form of a dollar suggestion of how much to allocate to the receiver. In one treatment, the advice presented is reported to the receiver, in the other treatment, the advice presented is not reported to the receiver. I find that when advice is public rather than private, the allocation decision of the dictator is significantly closer to the advice they were given. However, the observability of advice does not significantly affect the mean amount allocated by the dictator. These findings suggest that in decision-making, public knowledge of advice may benefit the advisor if they want their advice followed closely