IDEAS home Printed from https://ideas.repec.org/p/ecl/harjfk/rwp03-028.html
   My bibliography  Save this paper

Social Comparisons in Ultimatum Bargaining

Author

Listed:
  • Bohnet, Iris

    (Harvard U)

  • Zeckhauser, Richard

    (Harvard U)

Abstract

This paper employs experiments to examine the effects of social comparisons in ultimatum bargaining. We inform responders on the average offer before they decide whether to accept or reject their specific offer. To provide a metric for social comparison effects, we compare them with another change in informational conditions, asymmetric information on the pie size. Knowing comparable offers or knowing the pie size increases offers and rejection probabilities by similar magnitudes. Our results are consistent with people disliking deviations from the norm of equity but inconsistent with fairness theories, where people dislike income disparity between themselves and their referents.

Suggested Citation

  • Bohnet, Iris & Zeckhauser, Richard, 2003. "Social Comparisons in Ultimatum Bargaining," Working Paper Series rwp03-028, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp03-028
    as

    Download full text from publisher

    File URL: https://research.hks.harvard.edu/publications/getFile.aspx?Id=88
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bruno S. Frey & Iris Bohnet, 1999. "Social Distance and Other-Regarding Behavior in Dictator Games: Comment," American Economic Review, American Economic Association, vol. 89(1), pages 335-339, March.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    3. Nick Feltovich & John Duffy, 1999. "Does observation of others affect learning in strategic environments? An experimental study," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(1), pages 131-152.
    4. Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-1095, December.
    5. Rapoport, Amnon & Sundali, James A. & Seale, Darryl A., 1996. "Ultimatums in two-person bargaining with one-sided uncertainty: Demand games," Journal of Economic Behavior & Organization, Elsevier, vol. 30(2), pages 173-196, August.
    6. Straub, Paul G. & Murnighan, J. Keith, 1995. "An experimental investigation of ultimatum games: information, fairness, expectations, and lowest acceptable offers," Journal of Economic Behavior & Organization, Elsevier, vol. 27(3), pages 345-364, August.
    7. Croson, Rachel & Boles, Terry & Murnighan, J. Keith, 2003. "Cheap talk in bargaining experiments: lying and threats in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 143-159, June.
    8. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-1136, December.
    9. Guth, Werner & Huck, Steffen & Ockenfels, Peter, 1996. "Two-Level Ultimatum Bargaining with Incomplete Information: An Experimental Study," Economic Journal, Royal Economic Society, vol. 106(436), pages 593-604, May.
    10. Kagel, John H. & Kim, Chung & Moser, Donald, 1996. "Fairness in Ultimatum Games with Asymmetric Information and Asymmetric Payoffs," Games and Economic Behavior, Elsevier, vol. 13(1), pages 100-110, March.
    11. Timothy N. Cason & Vai-Lam Mui, 1998. "Social Influence in the Sequential Dictator Game," Monash Economics Working Papers archive-37, Monash University, Department of Economics.
    12. Linda Babcock & Xianghong Wang & George Loewenstein, 1996. "Choosing the Wrong Pond: Social Comparisons in Negotiations That Reflect a Self-Serving Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 1-19.
    13. John Kagel & Katherine Wolfe, 2001. "Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game," Experimental Economics, Springer;Economic Science Association, vol. 4(3), pages 203-219, December.
    14. Forsythe, Robert & Kennan, John & Sopher, Barry, 1991. "An Experimental Analysis of Strikes in Bargaining Games with One-Sided Private Information," American Economic Review, American Economic Association, vol. 81(1), pages 253-278, March.
    15. Croson, Rachel T. A., 1996. "Information in ultimatum games: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 30(2), pages 197-212, August.
    16. Harrison, Glenn W & McCabe, Kevin A, 1996. "Expectations and Fairness in a Simple Bargaining Experiment," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(3), pages 303-327.
    17. Armin Falk & Ernst Fehr & Urs Fischbacher, 2003. "On the Nature of Fair Behavior," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 20-26, January.
    18. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    19. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    20. Joseph Henrich & Robert Boyd & Samuel Bowles & Colin Camerer & Ernst Fehr & Herbert Gintis & Richard McElreath & Michael Alvard & Abigail Barr & Jean Ensminger & Kim Hill & Francisco Gil-White & Micha, 2001. "Economic Man in Cross-Cultural Perspective: Behavioral Experiments in Fifteen Small-Scale Societies," Working Papers 01-11-063, Santa Fe Institute.
    21. Knez Marc J. & Camerer Colin F., 1995. "Outside Options and Social Comparison in Three-Player Ultimatum Game Experiments," Games and Economic Behavior, Elsevier, vol. 10(1), pages 65-94, July.
    22. Rapoport, Amnon & Sundali, James A, 1996. "Ultimatums in Two-Person Bargaining with One-Sided Uncertainty: Offer Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(4), pages 475-494.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pamela Schmitt, 2004. "On Perceptions of Fairness: The Role of Valuations, Outside Options, and Information in Ultimatum Bargaining Games," Experimental Economics, Springer;Economic Science Association, vol. 7(1), pages 49-73, February.
    2. Güth, Werner & Kocher, Martin G., 2014. "More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 396-409.
    3. Ellingsen, Tore & Johannesson, Magnus, 2005. "Sunk costs and fairness in incomplete information bargaining," Games and Economic Behavior, Elsevier, vol. 50(2), pages 155-177, February.
    4. Tournadre, Fabienne & Villeval, Marie-Claire, 2004. "Learning from strikes," Labour Economics, Elsevier, vol. 11(2), pages 243-264, April.
    5. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Contracting under Incomplete Information and Social Preferences: An Experimental Study," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1516-1544.
    6. Croson, Rachel & Boles, Terry & Murnighan, J. Keith, 2003. "Cheap talk in bargaining experiments: lying and threats in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 143-159, June.
    7. Breitmoser, Yves & Tan, Jonathan H.W., 2013. "Reference dependent altruism in demand bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 127-140.
    8. Philipp E. Otto & Daniel Dittmer, 2019. "Simultaneous but independent ultimatum game: strategic elasticity or social motive dependency?," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(1), pages 61-80, March.
    9. Gehrig, Thomas & Guth, Werner & Levati, Vittoria & Levinsky, Rene & Ockenfels, Axel & Uske, Tobias & Weiland, Torsten, 2007. "Buying a pig in a poke: An experimental study of unconditional veto power," Journal of Economic Psychology, Elsevier, vol. 28(6), pages 692-703, December.
    10. Therese Lindahl & Magnus Johannesson, 2009. "Bargaining over a Common Good with Private Information," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 547-565, September.
    11. Ernesto Reuben & Frans van Winden, 2005. "Negative Reciprocity and the Interaction of Emotions and Fairness Norms," Tinbergen Institute Discussion Papers 05-014/1, Tinbergen Institute.
    12. Hoppe, Eva I. & Schmitz, Patrick W., 2015. "Do sellers offer menus of contracts to separate buyer types? An experimental test of adverse selection theory," Games and Economic Behavior, Elsevier, vol. 89(C), pages 17-33.
    13. Klempt Charlotte & Pull Kerstin & Stadler Manfred, 2019. "Asymmetric Information in Simple Bargaining Games: An Experimental Study," German Economic Review, De Gruyter, vol. 20(1), pages 29-51, February.
    14. Nikiforakis, Nikos & Oechssler, Jörg & Shah, Anwar, 2014. "Hierarchy, coercion, and exploitation: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 155-168.
    15. Ferreira, Mark, 2017. "When knowledge is not power: Asymmetric information, probabilistic deceit detection and threats in ultimatum bargainingAuthor-Name: Chavanne, David," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 4-17.
    16. Josie I. Chen & Kenju Kamei, 2018. "Disapproval aversion or inflated inequity acceptance? The impact of expressing emotions in ultimatum bargaining," Experimental Economics, Springer;Economic Science Association, vol. 21(4), pages 836-857, December.
    17. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    18. Murnighan, J. Keith & Wang, Long, 2016. "The social world as an experimental game," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 80-94.
    19. Alewell, Dorothea & Nicklisch, Andreas, 2009. "Wage differentials and social comparison: An experimental study of interrelated ultimatum bargaining," International Review of Law and Economics, Elsevier, vol. 29(3), pages 210-220, September.
    20. Besancenot, Damien & Dubart, Delphine & Vranceanu, Radu, 2013. "The value of lies in an ultimatum game with imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 239-247.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:harjfk:rwp03-028. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ksharus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/ksharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.