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Sequential Reciprocity in Two-Player, Two-Stage Games: An Experimental Analysis

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Author Info
Dhaene G.
Bouckaert J.

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Abstract

We experimentally test Dufwenberg and Kirchsteiger’s (2004) theory of sequential reciprocity in a sequential prisoner’s dilemma (SPD) and a mini-ultimatum game (MUG). Data on subjects’ behavior and first and second-order beliefs allow us to classify their behavior as a material best response, a reciprocity best response, both, or none. In both games, about 80% of the first-movers’ behavior is a material best response, a reciprocity best response, or both. The remaining 20% of first-movers almost always make choices that are “too kind” according to the theory of reciprocity. Second-movers’ behavior, in both games, is fully in line with the predictions of the theory. Average behavior and beliefs, across subjects, are found to be compatible with a sequential reciprocity equilibrium in the SPD, but not in the MUG. We also found first- and second-order beliefs to be unbiased in the SPD, and nearly unbiased in the MUG, with the exception that first-movers in the MUG significantly overestimated the second-mover’s rejection rate of unequal offers.

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Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2007026.

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Length: 50 pages
Date of creation: Nov 2007
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Handle: RePEc:ant:wpaper:2007026

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