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The origin of wealth matters: Equity norms trump equality norms in the ultimatum game with earned endowments

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  • Barber IV, Benjamin S.
  • English, William

Abstract

We conduct an ultimatum game with three treatments: one in which endowments are earned through a real effort task (answering spelling questions under time pressure), one in which endowments are awarded through lotteries, and a standard ultimatum game with exogenously provided wealth. When subjects earn the money at stake, the modal response ceases to be an equal split, as proposals anchor around comparative earnings and these proposals are statistically different from those observed in the other treatments. Moreover, roughly half of lower earners propose keeping less than 50% of the pot for themselves. We argue that these results are best explained by Bicchieri’s account of norms and that equity, rather than equality, becomes the dominant norm in ultimatum bargaining when endowments are earned.

Suggested Citation

  • Barber IV, Benjamin S. & English, William, 2019. "The origin of wealth matters: Equity norms trump equality norms in the ultimatum game with earned endowments," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 33-43.
  • Handle: RePEc:eee:jeborg:v:158:y:2019:i:c:p:33-43
    DOI: 10.1016/j.jebo.2018.11.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Ultimatum game; Norms; Equity theory; Inequity aversion; Earned endowments;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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