Money burning and rank egalitarianism with random dictators Daniel John Zizzo * Department of Economics and Christ Church College, University of Oxford, Manor Road Building, Manor Road, Oxford OX1 3UQ, UK Received 6 February 2003; accepted 9 June 2003 Abstract This paper presents the results of an experiment in Oxford where relative standing can be improved by randomly chosen dictators only by reducing (‘burning’) the money of the coplayers at a cost to themselves. Almost 50% of the subjects engage in money burning, and 75% of burners appear rank egalitarian. D 2003 Elsevier B.V. All rights reserved. Keywords: Money burning; Interdependent preferences; Rank egalitarianism JEL classification: C91; D11 1. Introduction Zizzo and Oswald (2001) presented an experiment on ‘money burning’: subjects could pay to reduce other subjects’ money (gained earlier in the experiment). Most of them did, and as the price of burning increased the amount of burning significantly decreased. Most burners were ‘rank egalitarian’: they burnt richer subjects at least as much as, or more than, poorer ones. This result of rank egalitarianism would seem consistent with Charness and Rabin’s (2002) model of interdependent preferences (or a non- linear version of Fehr and Schmidt, 1999: see Zizzo, 2002), but not with Bolton and Ockenfels (2000), and more generally not with any model of interdependent preferences where it does not matter for the subject how the money is split among other subjects. A serious problem in interpreting these results is that in Zizzo and Oswald everyone could engage in money burning: we can expect that money burning activity was conditional on each player’s expectations about the money burning activities by the other subjects. Also, the earnings of some subjects could go below zero out of a combination of actions by more than one player: they would 0165-1765/$ - see front matter D 2003 Elsevier B.V. All rights reserved. doi:10.1016/S0165-1765(03)00190-3 * Tel.: +44-1865-281-481; fax: +44-1865-286-581. E-mail address: daniel.zizzo@economics.ox.ac.uk (D.J. Zizzo). www.elsevier.com/locate/econbase Economics Letters 81 (2003) 263 – 266