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Learning to be imperfect: The ultimatum game

  • Gale, John
  • Binmore, Kenneth G.
  • Samuelson, Larry
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    This paper studies interactive learning processes that are subject to constant perturbations or "noise." We argue that payoffs in the Ultimatum Game are such that responders are more apt to be "noisy" than are proposers and show that as a result the learning process readily leads to outcomes that are Nash equilibria but not subgame-perfect. We conclude that game theorists should not restrict attention to the subgame-perfect equilibrium when predicting laboratory behavior in the Ultimatum Game. Journal of Economic Literature Classification Numbers: C70, C72.

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    File URL: http://www.sciencedirect.com/science/article/pii/S089982560580017X
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 8 (1995)
    Issue (Month): 1 ()
    Pages: 56-90

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    Handle: RePEc:eee:gamebe:v:8:y:1995:i:1:p:56-90
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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    1. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
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    4. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
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    6. E. Kohlberg & J.-F. Mertens, 1998. "On the Strategic Stability of Equilibria," Levine's Working Paper Archive 445, David K. Levine.
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    8. Smith, Vernon L, 1976. "Experimental Economics: Induced Value Theory," American Economic Review, American Economic Association, vol. 66(2), pages 274-79, May.
    9. Binmore, Ken & Shaked, Avner & Sutton, John, 1989. "An Outside Option Experiment," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 753-70, November.
    10. Prasnikar, Vesna & Roth, Alvin E, 1992. "Considerations of Fairness and Strategy: Experimental Data from Sequential Games," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 865-88, August.
    11. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October.
    12. Miller, John H. & Andreoni, James, 1991. "Can evolutionary dynamics explain free riding in experiments?," Economics Letters, Elsevier, vol. 36(1), pages 9-15, May.
    13. J. Ochs & Alvin E. Roth, 1998. "An experimental study of sequential bargaining," Levine's Working Paper Archive 331, David K. Levine.
    14. Binmore, K. & Samuelson, L. & Vaughan, R., 1993. "Musical Chairs: Modelling Noisy Evolution," Working papers 9324, Wisconsin Madison - Social Systems.
    15. 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.
    16. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
    17. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
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