Creating Culture in the Lab: Equilibrium Conventions in Inter-Generational Ultimatum Games

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Creating Culture in the Lab: Equilibrium Conventions in Inter-Generational Ultimatum Games

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Schotter, A.
Sopher, B.

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Abstract

The Ultimatum Game and the experiments surrounding it, have presented economists with a puzzle that they have struggled to explain. But as Robert Aumann has pointed out, while there may be only one sub-game perfect equilibrium to the Ultimatum Game, there are an infinite number of Nash equilibria. All that is needed to maintain a non-sub-game perfect equilibrium is a set of Sender beliefs that the offer contemplated is the minimum that would be accepted and behavior on the part of the Receivers that confirms these beliefs. The only puzzle is how such a set of mutually consistent beliefs developed in the first place and how they are passed on from one generation of player to the next. Using an inter-generational game experimental setting, this paper investigates how "culture" serves as the selection mechanism which solves this puzzle. Culture is then simply a system of beliefs and self-confirming actions which support any one of these non-sub-game perfect Nash equilibria as the accepted solution to the game being played. The outcome is, as Robert Aumann has called it a "perfectly good" Nash equilibrium convention which is just not perfect.

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Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number 00-07.

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Length: 50 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:cvs:starer:00-07

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Paper
- Barry Sopher & Andrew Schotter, 2000. "Creating Culture in the Lab: Equilibrium Conventions in Intergenerational Ultimatum Games," Departmental Working Papers 200020, Rutgers University, Department of Economics.

Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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.:

Schotter, A. & Sopher, B., 2000. "Social Learning and Coordination Conventions in Inter-Generational Games: An Experiment in Lamarckian Evolutionary Dynamics," Working Papers 00-01, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
Other versions:
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- Jordi Brandts & Gary Charness, 1998. "Hot vs. Cold: Sequential Responses and Preference Stability in Experimental Games," Economics Working Papers 321, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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