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Stakes matter in ultimatum games

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  • Steffen Andersen
  • Uri Gneezy
  • Moshe Hoffman
  • Seda Ertac
  • John List

Abstract

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that elicits frequent low offers and uses much larger stakes than in the literature, we are able to examine stakes' effects over ranges of data that are heretofore unexplored. Our main result is that proportionally equivalent offers are less likely to be rejected with high stakes. In fact, our paper is the first to present evidence that as stakes increase, rejection rates approach zero.

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Paper provided by The Field Experiments Website in its series Framed Field Experiments with number 00118.

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Date of creation: 2011
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Handle: RePEc:feb:framed:00118

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Web page: http://www.fieldexperiments.com

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  1. Steffen Andersen & Seda Ertac & Uri Gneezy & Moshe Hoffman & John A. List, 2011. "Stakes Matter in Ultimatum Games," American Economic Review, American Economic Association, American Economic Association, vol. 101(7), pages 3427-39, December.
  2. Jeffrey Carpenter, 2002. "The Demand for Punishment," Middlebury College Working Paper Series, Middlebury College, Department of Economics 0243, Middlebury College, Department of Economics.
  3. Lisa Cameron, 1995. "Raising the Stakes in the Ultimatum Game: Experimental Evidence From Indonesia," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 724, Princeton University, Department of Economics, Industrial Relations Section..
  4. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 384-394, March.
  5. List, John A. & Cherry, Todd L., 2008. "Examining the role of fairness in high stakes allocation decisions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 65(1), pages 1-8, January.
  6. Hessel Oosterbeek & Randolph Sloof & Gijs van de Kuilen, 2004. "Cultural differences in ultimatum game experiments: Evidence from a meta-analysis," Experimental, EconWPA 0401003, EconWPA.
  7. Matthias Sutter, 2007. "Deception through telling the truth?! Experimental evidence from individuals and teams," Working Papers 2007-26, Faculty of Economics and Statistics, University of Innsbruck.
  8. 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. Guillermo Baquero & Willem Smit & Luc Wathieu, 2013. "The generosity effect: Fairness in sharing gains and losses," ESMT Research Working Papers ESMT-13-08, ESMT European School of Management and Technology.
  2. Charness, Gary & Gneezy, Uri & Kuhn, Michael A., 2013. "Experimental methods: Extra-laboratory experiments-extending the reach of experimental economics," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 91(C), pages 93-100.
  3. Jason Shachat & J. Todd Swarthout, 2013. "Auctioning the right to play ultimatum games and the impact on equilibrium selection," Experimental Economics Center Working Paper Series, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University 2013-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  4. Mentzakis, Emmanouil & Mestelman, Stuart, 2013. "Hypothetical bias in value orientations ring games," Economics Letters, Elsevier, Elsevier, vol. 120(3), pages 562-565.
  5. Steffen Andersen & Uri Gneezy & Moshe Hoffman & Seda Ertac & John List, 2011. "Stakes matter in ultimatum games," Framed Field Experiments, The Field Experiments Website 00118, The Field Experiments Website.
  6. Ken Binmore, 2010. "Social norms or social preferences?," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, Fondazione Rosselli, vol. 9(2), pages 139-157, December.
  7. He, Yuqing, 2012. "Experimental test of utility maximization," Economics Discussion Papers 2012-32, Kiel Institute for the World Economy.
  8. Jason Shachat & J. Todd Swarthout, 2013. "Auctioning the Right to Play Ultimatum Games and the Impact on Equilibrium Selection," Papers 2013-10-14, Working Paper.
  9. Werner Güth & Martin G. Kocher, 2013. "More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature," Jena Economic Research Papers 2013-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  10. Griffin, John & Nickerson, David & Wozniak, Abigail, 2011. "Racial Differences in Inequality Aversion: Evidence from Real World Respondents in the Ultimatum Game," IZA Discussion Papers 5569, Institute for the Study of Labor (IZA).
  11. Parco, James E. & Murphy, Ryan O., 2013. "Resistance to truthful revelation in bargaining: Persistent bid shading and the play of dominated strategies," Journal of Economic Psychology, Elsevier, Elsevier, vol. 39(C), pages 154-170.
  12. Anmol Ratan, 2012. "Mistakes, Closure and Endowment Effect in Laboratory Experiments," Development Research Unit Working Paper Series, Monash University, Department of Economics 22-12, Monash University, Department of Economics.

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