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On the Behavior of Proposers in Ultimatum Games

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  • T. Brenner
  • N.J. Vriend

Abstract

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff- maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.

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Bibliographic Info

Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2003-08.

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Date of creation: Aug 2003
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Handle: RePEc:esi:evopap:2003-08

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Related research

Keywords: Ultimatum game; Non-equilibrium behavior; Laboratory experiment; Multi- armed bandit; Optimal learning; Gittins index; Bounded rationality;

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References

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  1. Brezzi, Monica & Lai, Tze Leung, 2002. "Optimal learning and experimentation in bandit problems," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 27(1), pages 87-108, November.
  2. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, Springer, vol. 27(2), pages 269-299.
  3. Sarin, Rajiv & Vahid, Farshid, 1999. "Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice," Games and Economic Behavior, Elsevier, Elsevier, vol. 28(2), pages 294-309, August.
  4. Matthew Rabin, 2001. "Risk Aversion and Expected Utility Theory: A Calibration Theorem," Levine's Working Paper Archive 7667, David K. Levine.
  5. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, Elsevier, vol. 8(1), pages 164-212.
  6. Bergemann, Dirk & Valimaki, Juuso, 2001. "Stationary multi-choice bandit problems," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 25(10), pages 1585-1594, October.
  7. Guth, Werner & Tietz, Reinhard, 1990. "Ultimatum bargaining behavior : A survey and comparison of experimental results," Journal of Economic Psychology, Elsevier, Elsevier, vol. 11(3), pages 417-449, September.
  8. Vriend, Nicolaas J., 1997. "Will reasoning improve learning?," Economics Letters, Elsevier, Elsevier, vol. 55(1), pages 9-18, August.
  9. repec:att:wimass:9325 is not listed on IDEAS
  10. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 7(1), pages 47-70, March.
  11. 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.
  12. Thaler, Richard H, 1988. "The Ultimatum Game," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(4), pages 195-206, Fall.
  13. 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.
  14. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, Elsevier, vol. 6(3), pages 347-369, May.
  15. Werner Guth & Reinhard Tietz, 1997. "Ultimatum bargaining behavior: a survey and comparison of experimental results," Levine's Working Paper Archive 1160, David K. Levine.
  16. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, Elsevier, vol. 8(1), pages 56-90.
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Cited by:
  1. Wenxin Xie & Yong Li & Yougui Wang & Keqiang Li, 2012. "Responders’ dissatisfaction may provoke fair offer," Journal of Economic Interaction and Coordination, Springer, Springer, vol. 7(2), pages 197-207, October.
  2. Reuben, Ernesto & van Winden, Frans, 2010. "Fairness perceptions and prosocial emotions in the power to take," Journal of Economic Psychology, Elsevier, Elsevier, vol. 31(6), pages 908-922, December.

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