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Revealing preferences for fairness in ultimatum bargaining

Author

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  • Andreoni,J.
  • Castillo,M.
  • Petrie,R.

    (University of Wisconsin-Madison, Social Systems Research Institute)

Abstract

The ultimatum game has been the primary tool for studying bargaining behavior in recent years. However, not enough information is gathered in the ultimatum game to get a clear picture of respondersâ?? utility functions. We analyze a convex ultimatum game in which respondersâ?? can â??shrinkâ? an offer as well as to accept or reject it. This allows us to observe enough about respondersâ?? preferences to estimate utility functions. We then successfully use data collected from convex ultimatum games to predict behavior in standard games. Our analysis reveals that rejections can be â??rationalizedâ? with neo-classical preferences over own- and other-payoff that are convex, nonmonotonic, and regular. These findings present a precise benchmark for models of fairness and bargaining.
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Suggested Citation

  • Andreoni,J. & Castillo,M. & Petrie,R., 2004. "Revealing preferences for fairness in ultimatum bargaining," Working papers 13, Wisconsin Madison - Social Systems.
    • Handle: RePEc:att:wimass:200413
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    Cited by:

    1. Nisvan Erkal & Lata Gangadharan & Nikos Nikiforakis, 2011. "Relative Earnings and Giving in a Real-Effort Experiment," American Economic Review, American Economic Association, vol. 101(7), pages 3330-3348, December.
    2. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June.
    3. James Andreoni & Emily Blanchard, 2006. "Testing subgame perfection apart from fairness in ultimatum games," Experimental Economics, Springer;Economic Science Association, vol. 9(4), pages 307-321, December.
    4. Abigail Barr & Chris WallaceJean Ensminger & Joseph Henrich, 2009. "Homo Aequalis: A Cross-Society Experimental Analysis of Three Bargaining Games," Economics Series Working Papers 422, University of Oxford, Department of Economics.
    5. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer;Economic Science Association, vol. 14(4), pages 519-546, November.
    6. James Andreoni, 2006. "Giving Gifts to Groups: How Congestible is Altruism?," Levine's Bibliography 321307000000000166, UCLA Department of Economics.

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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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