Ultimatums and Tantrums: A Resource Sharing Experiment
AbstractThe ultimatum game experiment has a long history in experimental economics. In-vivo ultimatum like strategic settings often involve uncertain rejection and payoff reversals. This paper presents the results of an ultimatum like experiment extended to reflect characteristics of a shared international river, in particular where a downstream nation has the potentially payoff reversing strategy option of a military strike. Subjects implicitly split an endowment between water consuming and security enhancing investments, where relative security investments determine the probability of the payoff reversal, with one subject being able to purchase a gamble to reverse the payoffs. Maximin, folk, and Nash solutions are compared, with results suggesting that behavior is responding to folk theorem like incentives. Dynamic analyses support this by showing no significant relationship between the gamble choice and its single period rationality.
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Bibliographic InfoPaper provided by EconWPA in its series Experimental with number 0512004.
Length: 32 pages
Date of creation: 07 Dec 2005
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Note: Type of Document - pdf; pages: 32
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Resource Economics; Peace Economics; Experimental Economics; Applied Game Theory;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- N4 - Economic History - - Government, War, Law, International Relations, and Regulation
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-14 (All new papers)
- NEP-CBE-2005-12-14 (Cognitive & Behavioural Economics)
- NEP-EXP-2005-12-14 (Experimental Economics)
- NEP-GTH-2005-12-14 (Game Theory)
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- Janmaat, John A & Ruijs, Arjan, 2006. "Investing in Arms to Secure Water," MPRA Paper 10667, University Library of Munich, Germany.
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