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Ultimatum bargaining: Algorithms vs. Humans

Author

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  • Ozkes, Ali I.
  • Hanaki, Nobuyuki
  • Vanderelst, Dieter
  • Willems, Jurgen

Abstract

We study human behavior in ultimatum game when interacting with either human or algorithmic opponents. We examine how the type of the AI algorithm (mimicking human behavior, optimising gains, or providing no explanation) and the presence of a human beneficiary affect sending and accepting behaviors. Our experimental data reveal that subjects generally do not differentiate between human and algorithmic opponents, between different algorithms, and between an explained and unexplained algorithm. However, they are more willing to forgo higher payoffs when the algorithm’s earnings benefit a human.

Suggested Citation

  • Ozkes, Ali I. & Hanaki, Nobuyuki & Vanderelst, Dieter & Willems, Jurgen, 2024. "Ultimatum bargaining: Algorithms vs. Humans," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004634
    DOI: 10.1016/j.econlet.2024.111979
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    References listed on IDEAS

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    1. March, Christoph, 2021. "Strategic interactions between humans and artificial intelligence: Lessons from experiments with computer players," Journal of Economic Psychology, Elsevier, vol. 87(C).
    2. van Damme, Eric & Binmore, Kenneth G. & Roth, Alvin E. & Samuelson, Larry & Winter, Eyal & Bolton, Gary E. & Ockenfels, Axel & Dufwenberg, Martin & Kirchsteiger, Georg & Gneezy, Uri & Kocher, Martin G, 2014. "How Werner Güth's ultimatum game shaped our understanding of social behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 292-318.
    3. Chugunova, Marina & Sele, Daniela, 2022. "We and It: An interdisciplinary review of the experimental evidence on how humans interact with machines," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 99(C).
    4. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
    5. Pablo Branas-Garza & Antonio M. Espin & Benedikt Herrmann, 2014. "Fair and unfair punishers coexist in the Ultimatum Game," SEET Working Papers 2014-02, BELIS, Istanbul Bilgi University.
    6. van Damme, Eric & Binmore, Kenneth G. & Roth, Alvin E. & Samuelson, Larry & Winter, Eyal & Bolton, Gary E. & Ockenfels, Axel & Dufwenberg, Martin & Kirchsteiger, Georg & Gneezy, Uri & Kocher, Martin G, 2014. "How Werner Güth's ultimatum game shaped our understanding of social behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 292-318.
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