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Reciprocity—An Indirect Evolutionary Analysis

In: Fairness in Bargaining and Markets

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  • Christian Korth

    (University of Bayreuth)

Abstract

In experimental investigations of the ultimatum game, participants quite consistently offer 30–50% of an available monetary surplus as first-moving proposers. They reject offers of less than 20% as second-moving responders, which results in zero payoff for both players. Particularly the latter observation is hard to reconcile with the assumption that economic actors are rational maximizers of their monetary payoffs.1 However, observations can be explained very well by including a consideration for fairness and reciprocity in players’ preferences. This is also true regarding many other games for which experimental findings are puzzling from a monetary-payoff maximization point of view. Neoclassical theory does not restrict preferences to those based solely on monetary payoffs or to strict monotonicity. However, economic agents who are spiteful, enjoy a warm glow donating money to anonymous strangers, or feel it worthwhile to incur private costs to punish free-riders of public goods have not been the conventional assumption in economics. The award of 2002’s Nobel Prize to Daniel Kahneman and Vernon Smith is only one indicator that this is changing fast.

Suggested Citation

  • Christian Korth, 2009. "Reciprocity—An Indirect Evolutionary Analysis," Lecture Notes in Economics and Mathematical Systems, in: Fairness in Bargaining and Markets, chapter 0, pages 35-55, Springer.
  • Handle: RePEc:spr:lnechp:978-3-642-02253-1_3
    DOI: 10.1007/978-3-642-02253-1_3
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    References listed on IDEAS

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    Cited by:

    1. Anders Poulsen & Odile Poulsen, 2009. "Altruism and welfare when preferences are endogenous," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-02, School of Economics, University of East Anglia, Norwich, UK..
    2. William D. Ferguson & Trang Kieu Nguyen, 2014. "Social Context and the Spread of HIV: An Evolutionary Game-Theoretic Investigation on the Impacts of Social Stigma on Epidemic Outcomes," Economies, MDPI, vol. 2(3), pages 1-22, August.
    3. Schliffke, Philipp, 2012. "The co-evolution of reciprocity-based wage offers and effort choices," Economics Letters, Elsevier, vol. 117(1), pages 326-329.

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    More about this item

    Keywords

    Nash Equilibrium; Social Preference; Ultimatum Game; Evolutionarily Stable Strategy; Dictator Game;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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