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What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game

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  • James Andreoni
  • Marco Castillo
  • Ragan Petrie

Abstract

The ultimatum game, by its all-or-nothing nature, makes it difficult to discern what kind of preferences may be generating choices. We explore a game that convexifies the decisions, allowing us a better look at the indifference curves of bargainers while maintaining the subgame-perfect equilibrium. We conclude that bargainers' preferences are convex and regular but not always monotonic. Money-maximization is the sole concern for about half of the subjects, while the other half reveal a preference for fairness. We also found, unexpectedly, the importance of risk aversion among money-maximizing proposers, which in turn generates significant bargaining power for fair-minded responders.

Suggested Citation

  • James Andreoni & Marco Castillo & Ragan Petrie, 2003. "What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game," American Economic Review, American Economic Association, vol. 93(3), pages 672-685, June.
  • Handle: RePEc:aea:aecrev:v:93:y:2003:i:3:p:672-685
    Note: DOI: 10.1257/000282803322157034
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    References listed on IDEAS

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