Hukou identity and fairness in the ultimatum game

The hukou system is a mandatory household registration system in China that assigns an individual either an urban/non-agricultural hukou or a rural/agricultural hukou based on one’s birthplace. This system favors urban residents and discriminates against rural residents in accessing state-owned resources such as employment, education, health care, and housing. To better understand how this institutionally imposed hukou identity impacts an individual’s sense of fairness in the ultimatum game, we conducted a field experiment in China using 9–12-year-old children and collected 672 observations. Subjects played a one-shot ultimatum game to allocate 20 yuan in groups of two. We employed a 2 (hukou salience) $$\times $$ × 2 (proposer’s hukou type) $$\times $$ × 2 (responder’s hukou type) experiment design and used the strategic method ultimatum game. We primed our subjects with their hukou identity before they made their decisions in the experiment. Results of this study show that hukou salience mainly affects rural hukou subjects, who belong to the perceived less-favored social group. On one hand, when the hukou identity is made salient, rural hukou proposers decrease their amount offered regardless of their responder’s hukou type. On the other hand, rural hukou responders expect higher offers from their urban hukou proposers when the hukou identity is revealed. We interpret these results as that rural hukou subjects tend to seek compensations for their perceived hukou inferiority to achieve fair distributions.