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Social Comparisons in Ultimatum Bargaining

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  • Iris Bohnet
  • Richard Zeckhauser

Abstract

Experiments are used to examine the effects of social comparisons in ultimatum bargaining. We inform responders about the average offer before they decide whether to accept or reject their specific offer. This significantly increases offers and offer-specific rejection probabilities. For comparison, we consider another change in informational conditions: telling responders the total pie is $30-"ex ante" it was either $15 or $30-affects offers and rejection probabilities roughly as much. Our results are consistent with people's dislike for deviations from the norm of equity but inconsistent with fairness theories, where people dislike income disparity between themselves and their referents. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

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Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 106 (2004)
Issue (Month): 3 (October)
Pages: 495-510

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Handle: RePEc:bla:scandj:v:106:y:2004:i:3:p:495-510
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  • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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  1. Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
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  8. Mitzkewitz,Michael & Nagel,Rosemarie, . "Envy,greed and anticipation in ultimatum games with incomplete information: An experimental study," Discussion Paper Serie B :181, University of Bonn, Germany.
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  11. Guth, Werner & Huck, Steffen & Ockenfels, Peter, 1996. "Two-Level Ultimatum Bargaining with Incomplete Information: An Experimental Study," Economic Journal, Royal Economic Society, vol. 106(436), pages 593-604, May.
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  15. John Kagel & Katherine Wolfe, 2001. "Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game," Experimental Economics, Springer, vol. 4(3), pages 203-219, December.
  16. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
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