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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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    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
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    7. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-37, September.
    8. J. Ochs & Alvin E. Roth, 1998. "An experimental study of sequential bargaining," Levine's Working Paper Archive 331, David K. Levine.
    9. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
    10. Cabrales, Antonio, 2000. "Stochastic Replicator Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 451-81, May.
    11. V. Prasnikar & A. Roth, 1998. "Considerations of fairness and strategy: experimental data from sequential games," Levine's Working Paper Archive 451, David K. Levine.
    12. K. Schlag, 2010. "Why Imitate, and if so, How? Exploring a Model of Social Evolution," Levine's Working Paper Archive 454, David K. Levine.
    13. 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.
    14. 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.
    15. Smith, Vernon L, 1976. "Experimental Economics: Induced Value Theory," American Economic Review, American Economic Association, vol. 66(2), pages 274-79, May.
    16. 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.
    17. Binmore, K. & Samuelson, L. & Vaughan, R., 1993. "Musical Chairs: Modelling Noisy Evolution," Working papers 9324, Wisconsin Madison - Social Systems.
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