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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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Paper provided by www.najecon.org in its series NajEcon Working Paper Reviews with number 666156000000000644.

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Date of creation: 16 Mar 2005
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Handle: RePEc:cla:najeco:666156000000000644

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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 005427, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. 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.
  3. Andreoni,J. & Blanchard,E., 2002. "Testing subgame perfection apart from fairness in ultimatum games," Working papers 15, Wisconsin Madison - Social Systems.
  4. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer, vol. 14(4), pages 519-546, November.
  5. James Andreoni, 2006. "Giving Gifts to Groups: How Congestible is Altruism?," Levine's Bibliography 321307000000000166, UCLA Department of Economics.

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