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Retribution In A Cheap-Talk Experiment

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  • Jordi Brandts
  • Gary Charnes

Abstract

We use a two-person 3-stage game to investigate whether people choose to punish or reward another player by sacrificing money to increase or decrease the other person's payoff. One player sends a message indicating an intended play, which is either favorable or unfavorable to the other player in the game. After the message, the sender and the receiver play a simultaneous 2x2 game. A deceptive message may be made, in an effort to induce the receiver to make a play favorable to the sender. Our focus is on whether receivers' rates of monetary sacrifice depend on the process and the perceived sender's intention, as is suggested by the literature on deception and procedural satisfaction. Models such as Rabin (1993), Sen (1997), and Charness and Rabin (1999) also permit rates of sacrifice to be sensitive to the sender's perceived intention, while outcome-based models such as Fehr and Schmidt (1999) and Bolton and Ockenfels (1997) predict otherwise. We find that deception substantially increases the punishment rate as a response to an action that is unfavorable to the receiver. We also find that a small but significant percentage of subjects choose to reward a favorable action choice made by the sender.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 454.00.

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Handle: RePEc:aub:autbar:454.00

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  1. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  2. Brandts, J. & Sola, C., 1998. "Reference Points and Negative Reciprocity in Simple Sequential Games," UFAE and IAE Working Papers 425.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Shapiro, Debra L. & Bies, Robert J., 1994. "Threats, Bluffs, and Disclaimers in Negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 60(1), pages 14-35, October.
  4. Gary Charness & Matthew Rabin, 2000. "Social Preferences: Some Simple Tests and a New Model," Econometric Society World Congress 2000 Contributed Papers 1483, Econometric Society.
  5. Armin Falk & Ernst Fehr & Urs Fischbacher, . "On the Nature of Fair Behavior," IEW - Working Papers 017, Institute for Empirical Research in Economics - University of Zurich.
  6. Bolton, G.E. & Brandts, J. & Ockenfels, A., 1997. "Measuring Motivations for the Reciprocal Responses Observed in a Simple Dilemma Game," UFAE and IAE Working Papers 400.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  7. Charness, Gary B & Levine, David I. I., 2000. "When Are Layoffs Acceptable? Evidence From A Quasi-Experiment," University of California at Santa Barbara, Economics Working Paper Series qt4vs7h4hh, Department of Economics, UC Santa Barbara.
  8. Gary E. Bolton & Jordi Brandts & Elena Katok, 2000. "How strategy sensitive are contributions?," Economic Theory, Springer, vol. 15(2), pages 367-387.
  9. Theo Offerman, 1999. "Hurting hurts more than Helping helps: The Role of the Self-serving Bias," Tinbergen Institute Discussion Papers 99-018/1, Tinbergen Institute.
  10. Roth, Alvin E & Murnighan, J Keith, 1982. "The Role of Information in Bargaining: An Experimental Study," Econometrica, Econometric Society, vol. 50(5), pages 1123-42, September.
  11. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  12. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
  13. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  14. Gary E Bolton & Axel Ockenfels, 1997. "A Theory of Equity, Reciprocity, and Competition," Levine's Working Paper Archive 1889, David K. Levine.
  15. Blount, Sally, 1995. "When Social Outcomes Aren't Fair: The Effect of Causal Attributions on Preferences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 63(2), pages 131-144, August.
  16. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
  17. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  18. Paul M. Romer, 1996. "Preferences, Promises, and the Politics of Entitlement," NBER Chapters, in: Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, pages 195-228 National Bureau of Economic Research, Inc.
  19. Timothy N. Cason & Vai-Lam Mui, 1998. "Social Influence in the Sequential Dictator Game," Development Research Unit Working Paper Series archive-37, Monash University, Department of Economics.
  20. Gary Charness, 1996. "Attribution and reciprocity in a simulated labor market: An experimental investigation," Economics Working Papers 283, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 1997.
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Cited by:
  1. James C. Cox & Daniel Friedman & Steven Gjerstad, 2006. "A Tractable Model of Reciprocity and Fairness," Experimental Economics Center Working Paper Series 2006-05, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  2. Gary Charness and Matthew Rabin., 2000. "Social Preferences: Some Simple Tests and a New Model," Economics Working Papers E00-283, University of California at Berkeley.
  3. Croson, Rachel & Boles, Terry & Murnighan, J. Keith, 2003. "Cheap talk in bargaining experiments: lying and threats in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 143-159, June.
  4. Martin Sandbu, 2008. "Axiomatic foundations for fairness-motivated preferences," Social Choice and Welfare, Springer, vol. 31(4), pages 589-619, December.
  5. Offerman, Theo, 2002. "Hurting hurts more than helping helps," European Economic Review, Elsevier, vol. 46(8), pages 1423-1437, September.

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