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Subgame perfection in ultimatum bargaining trees

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  • Stahl, Dale O.
  • Haruvy, Ernan

Abstract

In typical experiments on ultimatum bargaining, the game is described verbally and the majority of subjects deviate from subgame-perfect behavior. Proposers typically offer significantly more than the minimum possible and Responders reject "unfair" offers. In this work, we show that when the ultimatum bargaining game is presented as an abstract game tree, the vast majority of behavior is consistent with individualistic preferences and subgame-perfection. This finding raises doubts about theories that ignore the potential influence of social context and experiments that do not control for social context.

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  • Stahl, Dale O. & Haruvy, Ernan, 2008. "Subgame perfection in ultimatum bargaining trees," Games and Economic Behavior, Elsevier, vol. 63(1), pages 292-307, May.
    • Handle: RePEc:eee:gamebe:v:63:y:2008:i:1:p:292-307
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    4. Declerck, Carolyn H. & Kiyonari, Toko & Boone, Christophe, 2009. "Why do responders reject unequal offers in the Ultimatum Game? An experimental study on the role of perceiving interdependence," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 335-343, June.
    5. Smith, Vernon L. & Wilson, Bart J., 2018. "Equilibrium play in voluntary ultimatum games: Beneficence cannot be extorted," Games and Economic Behavior, Elsevier, vol. 109(C), pages 452-464.
    6. Wichardt, Philipp C. & Schunk, Daniel & Schmitz, Patrick W., 2009. "Participation costs for responders can reduce rejection rates in ultimatum bargaining," Economics Letters, Elsevier, vol. 103(1), pages 33-35, April.
    7. Ellingsen, Tore & Östling, Robert & Wengström, Erik, 2018. "How does communication affect beliefs in one-shot games with complete information?," Games and Economic Behavior, Elsevier, vol. 107(C), pages 153-181.
    8. Ohr Renate, 2015. "Europäische Integration am Wendepunkt? Zum möglichen Austritt Großbritanniens aus der EU / European integration at a turning point? Consequences of a British exit for the EU," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 99-114, January.
    9. Jordi Brandts & Enrique Fatas & Ernan Haruvy & Francisco Lagos, 2015. "The impact of relative position and returns on sacrifice and reciprocity: an experimental study using individual decisions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(3), pages 489-511, October.
    10. Susanne Lechner & Renate Ohr, 2011. "The right of withdrawal in the treaty of Lisbon: a game theoretic reflection on different decision processes in the EU," European Journal of Law and Economics, Springer, vol. 32(3), pages 357-375, December.
    11. Li, Shuwen & Houser, Daniel, 2022. "Stochastic bargaining in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 687-715.
    12. James C. Cox & Vjollca Sadiraj, 2018. "Incentives," Experimental Economics Center Working Paper Series 2018-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    13. Nguyen, N.P. & Shortle, J.S. & Reed, P.M. & Nguyen, T.T., 2013. "Water quality trading with asymmetric information, uncertainty and transaction costs: A stochastic agent-based simulation," Resource and Energy Economics, Elsevier, vol. 35(1), pages 60-90.

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