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On Perceptions of Fairness: The Role of Valuations, Outside Options, and Information in Ultimatum Bargaining Games

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  • Pamela Schmitt

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Abstract

This study examines fairness perceptions in ultimatum bargaining games with asymmetric payoffs, outside options, and different information states. Fairness perceptions were dependent on treatment conditions. Specifically, when proposers had higher chip values, dollar offers were lower than when responders had higher chip values. When responders had an outside option, offers were higher and were rejected less often than when proposers had an outside option. However, a given offer was rejected more often when responders had an outside option. Therefore, similar to the first mover advantage, the “advantaged†or “entitled†player received a higher monetary payoff than they would otherwise. When there was complete information about payoff amounts (payoff conversion rates and outside options), rejections occurred more often, and given offer amounts were rejected more often than when there was incomplete information. When there was incomplete information, offers were higher in the initial rounds than in the final rounds. These results suggest that proposers made offers strategically, making offers that would not be rejected, rather than out of a concern for fairness. Copyright Kluwer Academic Publishers 2004

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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 7 (2004)
Issue (Month): 1 (February)
Pages: 49-73

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Handle: RePEc:kap:expeco:v:7:y:2004:i:1:p:49-73

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Web page: http://www.springerlink.com/link.asp?id=102888

Related research

Keywords: ultimatum games; bargaining; experiments; fairness;

References

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Citations

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Cited by:
  1. Lechner, Susanne & Ohr, Renate, 2008. "The right of withdrawal in the treaty of Lison: A game theoretic reflection on different decision processes in the EU," Center for European, Governance and Economic Development Research Discussion Papers 77, University of Goettingen, Department of Economics.
  2. Werner Güth & Martin G. Kocher, 2013. "More than Thirty Years of Ultimatum Bargaining Experiments: Motives, Variations, and a Survey of the Recent Literature," CESifo Working Paper Series 4380, CESifo Group Munich.
  3. Ernesto Reuben & Frans van Winden, 2005. "Negative Reciprocity and the Interaction of Emotions and Fairness Norms," Tinbergen Institute Discussion Papers 05-014/1, Tinbergen Institute.
  4. Sven Fischer, 2005. "Inequality Aversion in Ultimatum Games with Asymmetric Conflict Payoffs - A Theoretical and Experimental Analysis -," Papers on Strategic Interaction 2005-36, Max Planck Institute of Economics, Strategic Interaction Group.
  5. Nikiforakis, Nikos & Oechssler, Jörg & Shah, Anwar, 2012. "Hierarchy, Coercion, and Exploitation: An Experimental Analysis," Working Papers 0530, University of Heidelberg, Department of Economics.
  6. Mikhael Shor, 2009. "Procedural Justice in Simple Bargaining Games," Working papers 2012-25, University of Connecticut, Department of Economics.
  7. Kurtis Swope & Pamela Schmitt & John Cadigan & Robert Shupp, 2009. "The Holdout Problem and Urban Sprawl: Experimental Evidence," Departmental Working Papers 24, United States Naval Academy Department of Economics.
  8. Irlenbusch, Bernd & Hennig-Schmidt, Heike & Rilke, Rainer & Walkowitz, Gari, 2013. "Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79975, Verein für Socialpolitik / German Economic Association.
  9. Ernesto Reuben & Frans van Winden, 2005. "Negative Reciprocity and the Interaction of Emotions and Fairness Norms," Tinbergen Institute Discussion Papers 05-014/1, Tinbergen Institute.
  10. Kohnz, Simone, 2006. "Self-Serving Biases in Bargaining," Discussion Papers in Economics 899, University of Munich, Department of Economics.
  11. Reuben, Ernesto & van Winden, Frans, 2010. "Fairness perceptions and prosocial emotions in the power to take," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 908-922, December.
  12. Michal Krawczyk, 2011. "A model of procedural and distributive fairness," Theory and Decision, Springer, vol. 70(1), pages 111-128, January.
  13. Smith, Vernon L., 2010. "Theory and experiment: What are the questions?," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 3-15, January.

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