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Interpersonal Comparisons of Utility in Bargaining : Evidence from a Transcontinental Ultimatum Game

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Author Info

  • Romina Boarini

    (OFCE - Observatoire Français des Conjonctures économiques - Observatoire Français des Conjonctures économiques)

  • Jean-François Laslier

    (Département d'Economie, Ecole Polytechnique - Polytechnique - X)

  • Stéphane Robin

    (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)

Abstract

This paper presents the experimental results of a “Transcontinental Ultimatum Game” implemented between India and France. The bargaining took the form of standard ultimatum games, but in one treatment Indian subjects made offers to French subjects and, in another treatment, French subjects made offers to Indian subjects. We observed that French→Indian bargaining mostly ended up with unequal splits of money in favour of French, while nearly equal splits were the most frequent outcome in Indian→French interactions. The experimental results are organized through a standard social reference model, modified for taking into account the different marginal value of money for bargainers. In our model bargaining is driven by relative standings comparisons between players, occurring in terms of real earnings (that is monetary earnings corrected for a purchasing power factor) obtained in the game. The norm of equity behind the equalization of real earnings is called local equity norm, and contrasted to a global equity norm which would encompass the wealth of players beyond the game. According to what we observed, no beyond-game concern seems to be relevantly endorsed by subjects.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00435110.

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Date of creation: 2009
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Handle: RePEc:hal:journl:halshs-00435110

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Related research

Keywords: Interpersonal Comparisons of Utility; Fairness; Bargaining experiment; Ultimatum Game;

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References

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  1. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
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Cited by:
  1. Gari Walkowitz & Clemens Oberhammer & Heike Hennig-Schmidt, 2004. "Experimenting over a Long Distance - A method to facilitate intercultural experiments," Bonn Econ Discussion Papers bgse17_2004, University of Bonn, Germany, revised Dec 2005.
  2. 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.

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