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Learning (not) to yield: An experimental study of evolving ultimatum game behavior

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  • Avrahami, Judith
  • Güth, Werner
  • Hertwig, Ralph
  • Kareev, Yaakov
  • Otsubo, Hironori

Abstract

Whether behavior converges toward rational play or fair play in repeated ultimatum games, depends on which player yields first. If responders conceded first by accepting low offers, proposers, would not need to learn to offer more. Play would thus converge toward unequal sharing. If proposers, learnt fast that low offers are doomed to be rejected and adjusted their offers accordingly, pressure, would be lifted from responders to learn to accept such offers. Play would thus converge toward equal, sharing. Here, we tested the hypothesis that it is regret—both material and strategic—which determines, how players adapt their behavior. We conducted a repeated ultimatum game experiment with, randomly changing strangers. One treatment offers players only feedback about the outcome of their, play. Another treatment offers additional information about the median outcomes in the population. We find that regret is a good predictor of the dynamics of play, in particular of proposer behavior., Except for a very short endgame phase, in which more tolerance of less equitable sharing surfaced, behavior converges toward equal sharing. Population information hardly speeds up this convergence.

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  • Avrahami, Judith & Güth, Werner & Hertwig, Ralph & Kareev, Yaakov & Otsubo, Hironori, 2013. "Learning (not) to yield: An experimental study of evolving ultimatum game behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 47-54.
  • Handle: RePEc:eee:soceco:v:47:y:2013:i:c:p:47-54
    DOI: 10.1016/j.socec.2013.08.009
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    3. Siegfried K. Berninghaus & Werner Güth & Stephan Schosser, 2014. "Backward Induction Or Forward Reasoning? – An Experiment Of Stochastic Alternating Offer Bargaining," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 16(01), pages 1-30.
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    5. Werner Güth & Hironori Otsubo, 2014. "Trust in generosity: An experiment of the repeated Yes-No game," Jena Economic Research Papers 2014-024, Friedrich-Schiller-University Jena.
    6. Einav Hart & Judith Avrahami & Yaakov Kareev & Peter M. Todd, 2014. "Investing Even in Uneven Contests: Effects of Asymmetry on Investment in Experimental All-Pay Contests," Discussion Paper Series dp660, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.

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    More about this item

    Keywords

    Ultimatum bargaining game; Reputation; Regret; Learning; Experiment;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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