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Preferences, Intentions, and Expectations: A Large-Scale Experiment with a Representative Subject Pool

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  • Bellemare, Charles

    ()
    (Université Laval)

  • Kröger, Sabine

    ()
    (Université Laval)

  • van Soest, Arthur

    ()
    (Tilburg University)

Abstract

We specify and estimate an econometric model which separately identifies distributional preferences and the effects of perceived intentions on responder behavior in the ultimatum game. We allow the effects of perceived intentions to depend, among other things, on the subjective probabilities responders attach to the possible offers. We estimate the model on a large representative sample from the Dutch population. We find that the relative importance of distributional preferences and perceived intentions depends significantly on the socioeconomic characteristics of responders. Strong inequity aversion to the other player’s disadvantage is found for lower educated and older respondents. Responders tend to punish unfavorable offers more if they expect that fair proposals will occur with higher probability.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3022.

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Length: 32 pages
Date of creation: Sep 2007
Date of revision:
Publication status: published in: Journal of Economic Behavior and Organization, 2011, 78 (3), 349-365
Handle: RePEc:iza:izadps:dp3022

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Keywords: intentions; subjective expectations; inequity aversion;

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References

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  1. Bellemare, C. & Kroger, S. & Soest, A.H.O. van, 2008. "Measuring inequity aversion in a heterogeneous population using experimental decisions and subjective probabilities," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-376716, Tilburg University.
  2. James C. Cox & Cary A. Deck, 2005. "On the Nature of Reciprocal Motives," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 43(3), pages 623-635, July.
  3. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers, University of California at Berkeley 92-199, University of California at Berkeley.
  4. Bellemare, Charles & Kröger, Sabine, 2004. "On Representative Social Capital," IZA Discussion Papers 1145, Institute for the Study of Labor (IZA).
  5. Güth, Werner & Schmidt, Carsten & Sutter, Matthias, 2001. "Fairness in the mail and opportunism in the internet: A newspaper experiment on ultimatum bargaining," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2001,42, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  6. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 37(1), pages 161-169, October.
  7. Jordi Brandts & Gary Charness, 1998. "Hot vs. cold: Sequential responses and preference stability in experimental games," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 321, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Oxoby, Robert J. & McLeish, Kendra N., 2004. "Sequential decision and strategy vector methods in ultimatum bargaining: evidence on the strength of other-regarding behavior," Economics Letters, Elsevier, Elsevier, vol. 84(3), pages 399-405, September.
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  11. Bahry, Donna L. & Wilson, Rick K., 2006. "Confusion or fairness in the field? Rejections in the ultimatum game under the strategy method," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 60(1), pages 37-54, May.
  12. Bellemare, Charles & Kröger, Sabine, 2003. "On Representative Trust," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2003,27, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  13. Offerman, Theo, 2002. "Hurting hurts more than helping helps," European Economic Review, Elsevier, Elsevier, vol. 46(8), pages 1423-1437, September.
  14. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 47(2), pages 268-298, May.
  15. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3014, C.E.P.R. Discussion Papers.
  16. Heike Hennig-Schmidt & Zhu-Yu Li & Chaoliang Yang, 2004. "Why People Reject Advantageous Offers – Non-monotone Strategies in Ultimatum Bargaining," Bonn Econ Discussion Papers, University of Bonn, Germany bgse22_2004, University of Bonn, Germany.
  17. Lea, Stephen E. G. & Webley, Paul, 1997. "Pride in economic psychology," Journal of Economic Psychology, Elsevier, Elsevier, vol. 18(2-3), pages 323-340, April.
  18. Jeannette Brosig & Joachim Weimann & Chun-Lei Yang, 2003. "The Hot Versus Cold Effect in a Simple Bargaining Experiment," Experimental Economics, Springer, Springer, vol. 6(1), pages 75-90, June.
  19. Gary Charness & David I. Levine, 2007. "Intention and Stochastic Outcomes: An Experimental study," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(522), pages 1051-1072, 07.
  20. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 004, Institute for Empirical Research in Economics - University of Zurich.
  21. Manski, Charles F., 2002. "Identification of decision rules in experiments on simple games of proposal and response," European Economic Review, Elsevier, Elsevier, vol. 46(4-5), pages 880-891, May.
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Cited by:
  1. Eckel, Catherine & Gintis, Herbert, 2010. "Blaming the messenger: Notes on the current state of experimental economics," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 73(1), pages 109-119, January.
  2. Fehr, Ernst & Schmidt, Klaus M., 2010. "On inequity aversion: A reply to Binmore and Shaked," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 73(1), pages 101-108, January.
  3. Ernst Fehr, 2009. "On the economics and biology of trust," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 399, Institute for Empirical Research in Economics - University of Zurich.

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