Accepting Zero in the Ultimatum Game Does Not Reflect Selfish Preferences
AbstractThe rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie” remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
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Bibliographic InfoPaper provided by Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University in its series Working Papers with number 201203.
Length: 18 pages
Date of creation: Jan 2012
Date of revision:
ultimatum game; dictator game; altruism; social welfare; costly punishment; selfishness; social preferences;
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-09 (All new papers)
- NEP-CBE-2013-06-09 (Cognitive & Behavioural Economics)
- NEP-EVO-2013-06-09 (Evolutionary Economics)
- NEP-EXP-2013-06-09 (Experimental Economics)
- NEP-GTH-2013-06-09 (Game Theory)
- NEP-HPE-2013-06-09 (History & Philosophy of Economics)
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