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The Indirect Evolutionary Approach to Explaining Fair Allocations

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  • Huck, Steffen
  • Oechssler, Jorg

Abstract

Experimental results on the ultimatum game show clearly that (1) large fractions of players offer a 'fair' allocation and (2) that unfair (but positive) offers are systematically rejected. We offer an explanation of this behavior using the 'indirect evolutionary approach' which is based on the assumption that players behave rationally for given preferences but that their preferences change through an evolutionary process. We prove that despite anonymous interaction a preference for punishing unfair offers is an evolutionarily successful strategy if players interact in small groups. This leads players to split the resource equally almost always. However, the equal split is not due to 'true fairness' (or 'altruism') but is entirely caused by the (justified) fear that unfair offers might be rejected.
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  • Huck, Steffen & Oechssler, Jorg, 1999. "The Indirect Evolutionary Approach to Explaining Fair Allocations," Games and Economic Behavior, Elsevier, vol. 28(1), pages 13-24, July.
  • Handle: RePEc:eee:gamebe:v:28:y:1999:i:1:p:13-24
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    References listed on IDEAS

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    1. Samuelson, L., 1989. "Evolutionnary Stability In Asymmetric Games," Papers 11-8-2, Pennsylvania State - Department of Economics.
    2. Cressman, R. & Schlag, K. H., 1998. "The Dynamic (In)Stability of Backwards Induction," Journal of Economic Theory, Elsevier, pages 260-285.
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    7. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, pages 1096-1136.
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    12. Kirchsteiger, Georg, 1994. "The role of envy in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, pages 373-389.
    13. Bolton Gary E. & Zwick Rami, 1995. "Anonymity versus Punishment in Ultimatum Bargaining," Games and Economic Behavior, Elsevier, pages 95-121.
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    15. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, pages 363-391.
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    20. Noldeke Georg & Samuelson Larry, 1993. "An Evolutionary Analysis of Backward and Forward Induction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 425-454, July.
    21. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, pages 1096-1136.
    22. Kirchsteiger, Georg, 1994. "The role of envy in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, pages 373-389.
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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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