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Revealing Preferences for Fairness in Ultimatum Bargaining

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  • James Andreoni
  • Marco Castillo
  • Ragan Petrie

Abstract

The ultimatum game has been the primary tool for studying bargaining behavior in recent years. However, not enough information is gathered in the ultimatum game to get a clear picture of respondersâ?? utility functions. We analyze a convex ultimatum game in which respondersâ?? can â??shrinkâ?� an offer as well as to accept or reject it. This allows us to observe enough about respondersâ?? preferences to estimate utility functions. We then successfully use data collected from convex ultimatum games to predict behavior in standard games. Our analysis reveals that rejections can be â??rationalizedâ?� with neo-classical preferences over own- and other-payoff that are convex, nonmonotonic, and regular. These findings present a precise benchmark for models of fairness and bargaining.

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Bibliographic Info

Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 122247000000000807.

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Date of creation: 04 Jan 2005
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Handle: RePEc:cla:levrem:122247000000000807

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  1. Gneezy, Uri & Haruvy, Ernan & Roth, Alvin E., 2003. "Bargaining under a deadline: evidence from the reverse ultimatum game," Games and Economic Behavior, Elsevier, Elsevier, vol. 45(2), pages 347-368, November.
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  7. Andreoni, James & Brown, Paul M. & Vesterlund, Lise, 2002. "What Makes an Allocation Fair? Some Experimental Evidence," Games and Economic Behavior, Elsevier, Elsevier, vol. 40(1), pages 1-24, July.
  8. Charness, Gary B & Rabin, Matthew, 2001. "Understanding Social Preferences With Simple Tests," University of California at Santa Barbara, Economics Working Paper Series qt0dc3k4m5, Department of Economics, UC Santa Barbara.
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  10. Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
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  15. David Cooper & Nick Feltovich & Alvin Roth & Rami Zwick, 2003. "Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games," Experimental Economics, Springer, Springer, vol. 6(2), pages 181-207, October.
  16. Eckel, Catherine C & Grossman, Philip J, 2001. "Chivalry and Solidarity in Ultimatum Games," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 39(2), pages 171-88, April.
  17. David K Levine, 1997. "Modeling Altruism and Spitefulness in Experiments," Levine's Working Paper Archive 2047, David K. Levine.
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  19. James Andreoni & Marco Castillo & Ragan Petrie, 2003. "What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game," American Economic Review, American Economic Association, American Economic Association, vol. 93(3), pages 672-685, June.
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  21. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 3(4), pages 367-388, December.
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Cited by:
  1. Abigail Barr & Chris Wallace & Jean Ensminger & Juan Camilo Cárdenas, 2009. "Homo Æqualis: A Cross-Society Experimental Analysis of Three Bargaining Games," DOCUMENTOS CEDE, UNIVERSIDAD DE LOS ANDES-CEDE 005427, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. James Andreoni & Emily Blanchard, 2006. "Testing subgame perfection apart from fairness in ultimatum games," Experimental Economics, Springer, Springer, vol. 9(4), pages 307-321, December.
  3. 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, American Economic Association, vol. 97(3), pages 818-827, June.
  4. James Andreoni, 2006. "Giving Gifts to Groups: How Congestible is Altruism?," Levine's Bibliography 321307000000000166, UCLA Department of Economics.
  5. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer, Springer, vol. 14(4), pages 519-546, November.

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