Creating Culture in the Lab: Equilibrium Conventions in Intergenerational Ultimatum Games
AbstractThe Ultimatum Game and the experiments surrounding it, have presented economists with a puzzle that they have struggled to explain. But as Robert Aumann has pointed out, while there may be only one sub-game perfect equilibrium to the Ultimatum Game, there are an infinite number of Nash equilibria. All that is needed to maintain a non-sub-game perfect equilibrium is a set of Sender beliefs that the offer contemplated is the minimum that would be accepted and behavior on the part of the Receivers that confirms these beliefs. The only puzzle is how such a set of mutually consistent beliefs developed in the first place and how they are passed on from one generation of player to the next. Using an inter-generational game experimental setting, this paper investigates how "culture" serves as the selection mechanism which solves this puzzle. Culture is then simply a system of beliefs and self-confirming actions which support any one of these non-sub-game perfect Nash equilibria as the accepted solution to the game being played. The outcome is, as Robert Aumann has called it a "perfectly good" Nash equilibrium convention which is just not perfect.
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Bibliographic InfoPaper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200020.
Date of creation: 24 Oct 2000
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conventions; culture; experimental games; intergenerational games;
Other versions of this item:
- Schotter, A. & Sopher, B., 2000. "Creating Culture in the Lab: Equilibrium Conventions in Inter-Generational Ultimatum Games," Working Papers 00-07, C.V. Starr Center for Applied Economics, New York University.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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