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Revealing Preferences for Fairness in Ultimatum Bargaining

  • James Andreoni
  • Marco Castillo
  • Ragan Petrie

The ultimatum game has been the primary tool for studying bar-gaining behavior in recent years. However, not enough information is gathered in the ultimatum game to get a clear picture of responders¡¯ utility functions. We analyze a convex ultimatum game in which responders¡¯ can ¡°shrink¡± an offer as well as to accept or reject it. This allows us to observe enough about responders¡¯ preferences to estimate utility functions. We use data collected from convex ultimatum games to successfully predict behavior in standard games. Rejections can be ¡°rationalized¡± with neo-classical preferences over own- and other-payoff that are convex, nonmonotonic, and regular.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 122247000000000807.

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Date of creation: 04 Jan 2005
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Handle: RePEc:cla:levrem:122247000000000807
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