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Express Yourself: The Price of Fairness in a Simple Distribution Game

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  • Andreas Nicklisch

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    Abstract

    A simple two-person distribution game similar to the ultimatum game is introduced. However, unlike the standard ultimatum game, responders can determine the payoff for the proposer in case of rejection. Therefore, they can express their concerns in monetary quantities. The experimental data are analyzed with respect to inequity aversion and intended punishment. The analysis casts doubt on a single motivation of responders' actions, but supports a combination of reciprocity and inequity aversion. ased on these findings, the data support a simple model for distribution preferences based on an increasing price for exposing responders to unkind offers.

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    File URL: ftp://papers.econ.mpg.de/esi/discussionpapers/2004-36.pdf
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    Bibliographic Info

    Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2004-36.

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    Length: 20 pages
    Date of creation: Nov 2004
    Date of revision:
    Handle: RePEc:esi:discus:2004-36

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    Related research

    Keywords: ultimatum bargaining; inequity aversion; efficiency concerns; fairness preferences;

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    1. Rabin, Mathew, 2002. "A Perspective on Psychology and Economics," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt4z78n1r9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    2. Armin Falk & Urs Fischbacher, 2001. "A Theory of Reciprocity," CESifo Working Paper Series 457, CESifo Group Munich.
    3. James Cox & Daniel Friedman & Steven Gjerstad, 2004. "A Tractable Model of Reciprocity and Fairness," Experimental, EconWPA 0406001, EconWPA.
    4. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching, EconWPA 0303002, EconWPA.
    5. Armin Falk & Ernst Fehr & Urs Fischbacher, . "On the Nature of Fair Behavior," IEW - Working Papers 017, Institute for Empirical Research in Economics - University of Zurich.
    6. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    7. Georg Kirchsteiger, 1994. "The role of envy in ultimatum games," ULB Institutional Repository 2013/5925, ULB -- Universite Libre de Bruxelles.
    8. Georg Kirchsteiger & Martin Dufwenberg, 2004. "A theory of sequential reciprocity," ULB Institutional Repository 2013/5899, ULB -- Universite Libre de Bruxelles.
    9. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
    10. Telser, L G, 1995. "The Ultimatum Game and the Law of Demand," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 105(433), pages 1519-23, November.
    11. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity - Evidence and Economic Applications," CEPR Discussion Papers 2703, C.E.P.R. Discussion Papers.
    12. Rami Zwick & Xiao-Ping Chen, 1999. "What Price Fairness? A Bargaining Study," Management Science, INFORMS, INFORMS, vol. 45(6), pages 804-823, June.
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