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Why People Reject Advantageous Offers – Non-monotone Strategies in Ultimatum Bargaining

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Author Info
Heike Hennig-Schmidt
Zhu-Yu Li
Chaoliang Yang

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Abstract

When using the strategy method in ultimatum bargaining, many researchers ask responders for the minimal acceptable offer only implicitly assuming strategies to be monotone. Recent research has shown, however, that subjects decline disadvantageous and advantageous proposals. We report on an ultimatum game video experiment where more than 50 percent of the responders rejected advantageous offers. Proposers and responders acted together in groups of three people each and were video taped during decision making. The videotapes then were content analyzed. Our experimental design provides the unique opportunity to learn from participants’ spontaneous discussions about their motivations for rejecting advantageous offers. Main motives are social concern, non-expectancy of high offers, emotional, ethical, and moral reasons, group-specific decision rules and aversion against unpleasant numbers.

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File URL: ftp://web.bgse.uni-bonn.de/pub/RePEc/bon/bonedp/bgse22_2004.pdf
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Publisher Info
Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse22_2004.

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Length: 32
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:bon:bonedp:bgse22_2004

Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=494

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Related research
Keywords: ultimatum game; video experiments; strategy method; content analysis; non-monotone strategies; social preferences;

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Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Microeconomic Data
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
F00 - International Economics - - General - - - General
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Huck, Steffen, 1999. "Responder behavior in ultimatum offer games with incomplete information," Journal of Economic Psychology, Elsevier, vol. 20(2), pages 183-206, April. [Downloadable!] (restricted)
  3. Heike Hennig-Schmidt, 2000. "The Impact of Fairness on Decision Making - An Analysis of Different Video Experiments," Bonn Econ Discussion Papers bgse14_2001, University of Bonn, Germany, revised Feb 2002. [Downloadable!]
  4. Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers iewwp016, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  5. Mitzkewitz, Michael & Nagel, Rosemarie, 1993. "Experimental Results on Ultimatum Games with Incomplete Information," International Journal of Game Theory, Springer, vol. 22(2), pages 171-98.
  6. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics. [Downloadable!]
  7. Gary E. Bolton & Jordi Brandts & Axel Ockenfels, 2000. "Fair Procedures. Evidence from Games Involving Lotteries," UFAE and IAE Working Papers 483.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  8. Werner Güth, 2001. "How Ultimatum Offers Emerge: A Study in Bounded Rationality," Homo Oeconomicus, Institute of SocioEconomics, vol. 18, pages 91-110.
    Other versions:
  9. Gary E Bolton & Axel Ockenfels, 1997. "A Theory of Equity, Reciprocity, and Competition," Levine's Working Paper Archive 1889, David K. Levine. [Downloadable!]
  10. Joseph Henrich et al., 2001. "In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies," American Economic Review, American Economic Association, vol. 91(2), pages 73-78, May. [Downloadable!] (restricted)
    Other versions:
  11. Knez Marc J. & Camerer Colin F., 1995. "Outside Options and Social Comparison in Three-Player Ultimatum Game Experiments," Games and Economic Behavior, Elsevier, vol. 10(1), pages 65-94, July. [Downloadable!] (restricted)
  12. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics. [Downloadable!]
    Other versions:
  13. Werner Guth & Carsten Schmidt & Matthias Sutter, 2003. "Fairness in the Mail and Opportunism in the Internet - A Newspaper Experiment on Ultimatum Bargaining," Artefactual Field Experiments 0044, The Field Experiments Website. [Downloadable!]
    Other versions:
  14. Juan Camilo Cardenas, 2004. "Bringing the Lab to the Field: More than Changing Subjects," Artefactual Field Experiments 0020, The Field Experiments Website. [Downloadable!]
  15. Gary Bornstein & Ilan Yaniv, 1998. "Individual and Group Behavior in the Ultimatum Game: Are Groups More “Rational†Players?," Experimental Economics, Springer, vol. 1(1), pages 101-108, June. [Downloadable!] (restricted)
  16. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. [Downloadable!] (restricted)
  17. Loomes, Graham, 1999. "Some Lessons from Past Experiments and Some Challenges for the Future," Economic Journal, Royal Economic Society, vol. 109(453), pages F35-45, February. [Downloadable!] (restricted)
  18. Jeannette Brosig & Joachim Weimann & Chun-Lei Yang, 2003. "The Hot Versus Cold Effect in a Simple Bargaining Experiment," Experimental Economics, Springer, vol. 6(1), pages 75-90, June. [Downloadable!] (restricted)
  19. Oxoby, Robert J. & McLeish, Kendra N., 2004. "Sequential decision and strategy vector methods in ultimatum bargaining: evidence on the strength of other-regarding behavior," Economics Letters, Elsevier, vol. 84(3), pages 399-405, September. [Downloadable!] (restricted)
  20. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
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