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Social Comparisons and Reference Group Formation: Some Expermental Evidence

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  • Ian McDonald
  • Nikos Nikiforakis
  • Nilss Olekalns
  • Hugh Sibly

Abstract

We investigate reference group formation and the impact of social comparisons on ultimatum bargaining using a laboratory experiment. Three individuals compete in a real-e¤ort task for the role of the proposer in a three-player ultimatum game. The role of the responder is randomly allocated. The third individual receives a ?fixed payment - our treatment variable - and makes no decision. The existence of a non-responder has a dramatic e¤ect on bargaining outcomes. In the most extreme treatment, more than half of the o¤ers are rejected. Behavior shows individuals exhibit self-serving bias in the way they de?ne their reference groups.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1069.

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Length: 24 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:mlb:wpaper:1069

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Web page: http://www.economics.unimelb.edu.au
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Keywords: social comparisons; ultimatum bargaining; laboratory experiments; self-serving bias; real-e¤ort;

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References

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Citations

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Cited by:
  1. Timothy N. Cason & Lata Gangadharan & Nikos Nikiforakis, 2010. "Can Real-Effort Investments Inhibit the Convergence of Experimental Markets?," Purdue University Economics Working Papers 1232, Purdue University, Department of Economics.
  2. Nikos Nikiforakis & Helen Mitchell, 2014. "Mixing the Carrots with the Sticks : Third Party Punishment and Reward," Working Papers halshs-00924995, HAL.
  3. James Bland & Nikos Nikiforakis, 2013. "Tacit Coordination in Games with Third-Party Externalities," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_19, Max Planck Institute for Research on Collective Goods.
  4. Riyanto, Yohanes E. & Zhang, Jianlin, 2013. "The impact of social comparison of ability on pro-social behaviour," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 37-46.

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