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Actions and Beliefs: Estimating Distribution-Based Preferences Using a Large Scale Experiment with Probability Questions on Expectations

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Author Info
Charles Bellemare ()
Sabine Kröger ()
Arthur van Soest

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Abstract

We combine the choice data of proposers and responders in the ultimatum game, their expectations elicited in the form of subjective probability questions, and the choice data of proposers (“dictators”) in a dictator game to estimate a structural model of decision making under uncertainty. We use a large and representative sample of subjects drawn from the Dutch population. Our results indicate that there is considerable heterogeneity in preferences for equity in the population. Changes in preferences have an important impact on decisions of dictators in the dictator game and responders in the ultimatum game, but a smaller impact on decisions of proposers in the ultimatum game, a result due to proposer’s subjective expectations about responders’ decisions. The model which uses subjective data on expectations has better predictive power and lower noise level than a model which assumes that players have rational expectations.

Afin de déceler un modèle structurel de prise de décision dans l'incertitude, nous combinons les données recueillies par i) les choix des deux types de joueurs dans le jeu de l'ultimatum (ceux qui proposent et ceux qui répondent), ii) leurs attentes obtenues sous la forme de questions à probabilité subjective, et iii) les choix des dictateurs (premiers joueurs) dans le jeu du dictateur. Nous utilisons un large échantillon représentatif des sujets dans la population néerlandaise. Nos résultats indiquent une hétérogénéité considérable dans la population sur les préférences en matière d'équité. La diversité de ces préférences a un impact important sur les décisions des dictateurs dans le jeu du dictateur, et sur les répondeurs dans le jeu de l'ultimatum, mais un impact plutôt moindre sur les décisions des joueurs qui proposent dans le jeu de l'ultimatum. Cette dernière observation est due aux attentes subjectives de ces joueurs face aux décisions des répondeurs. Le modèle qui utilise des données subjectives sur les attentes des joueurs prévoit mieux les choix des sujets et réduit plus le bruit qu'un modèle qui suppose que les joueurs ont des attentes rationnelles.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2006s-16.

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Date of creation: 01 Sep 2006
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Handle: RePEc:cir:cirwor:2006s-16

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Related research
Keywords: ; attentes subjectives; aversion à l'injustice; jeu de l'ultimatum;

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Find related papers by JEL classification:
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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References listed on IDEAS
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  1. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-65, October. [Downloadable!] (restricted)
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  2. 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. [Downloadable!] (restricted)
  3. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series 1042, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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  4. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December. [Downloadable!]
  5. Carpenter, Jeffrey & Verhoogen, Eric & Burks, Stephen, 2005. "The effect of stakes in distribution experiments," Economics Letters, Elsevier, vol. 86(3), pages 393-398, March. [Downloadable!] (restricted)
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  6. Goeree, Jacob K. & Holt, Charles A., 2000. "Asymmetric inequality aversion and noisy behavior in alternating-offer bargaining games," European Economic Review, Elsevier, vol. 44(4-6), pages 1079-1089, May. [Downloadable!] (restricted)
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  7. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August. [Downloadable!] (restricted)
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  8. 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)
  9. Bellemare, C. & Kroger, S., 2004. "On representative social capital," Discussion Paper 57, Tilburg University, Center for Economic Research. [Downloadable!]
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  10. Andreas Ortmann & John Fitzgerald & Carl Boeing, 2000. "Trust, Reciprocity, and Social History: A Re-examination," Experimental Economics, Springer, vol. 3(1), pages 81-100, June. [Downloadable!] (restricted)
  11. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, March. [Downloadable!]
  12. Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutstrom & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," Artefactual Field Experiments 0053, The Field Experiments Website. [Downloadable!]
  13. Manski, Charles F., 2002. "Identification of decision rules in experiments on simple games of proposal and response," European Economic Review, Elsevier, vol. 46(4-5), pages 880-891, May. [Downloadable!] (restricted)
  14. Yaw Nyarko & Andrew Schotter, 2002. "An Experimental Study of Belief Learning Using Elicited Beliefs," Econometrica, Econometric Society, vol. 70(3), pages 971-1005, May. [Downloadable!] (restricted)
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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. Olivier Armantier & Nicolas Treich, 2006. "Overbidding in Independant Private-Values Auctions and Misperception of Probabilities," CIRANO Working Papers 2006s-15, CIRANO. [Downloadable!]
  2. Charles Bellemare & Luc Bissonnette & Sabine Kroger, 2007. "Flexible Approximation of Subjective Expectations using Probability Questions -An Application to the Investment Game-," Cahiers de recherche 0734, CIRPEE. [Downloadable!]
    Other versions:
  3. Christian Belzil, 2007. "Subjective Beliefs and Schooling Decisions," IZA Discussion Papers 2820, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Antonio Cabrales & Raffaele Miniaci & Marco Piovesan & Giovanni Ponti, 2007. "An experiment on markets and contracts : do social preferences determine corporate culture?," Economics Working Papers we072010, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  5. Antonio Cabrales & Raffaele Miniaci & Marco Piovesan & Giovanni Ponti, 2008. "Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts," Discussion Papers 08-06, University of Copenhagen. Department of Economics. [Downloadable!]
    Other versions:
  6. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June. [Downloadable!]
    Other versions:
  7. Carsten Schmidt & Matthias Sutter & Werner Güth, 2005. "Bargaining Outside the Lab - A Newspaper Experiment of a Three-Person Ultimatum Game," Papers on Strategic Interaction 2006-04, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
    Other versions:
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