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Inequality Aversion in Ultimatum Games with Asymmetric Conflict Payoffs - A Theoretical and Experimental Analysis -

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  • Sven Fischer

Abstract

Assuming inequality averse subjects as modeled by Fehr and Schmidt (1999) or in the ERC model by Bolton and Ockenfels (2000) in ultimatum games with asymmetric conflict payoffs allows to make predictions especially concerning responder acceptance thresholds. These predictions are tested in a laboratory experiment eliciting proposer offers and respondent's acceptance thresholds using the strategy vector method. By and large both models make good predictions. However, they are unable to convincingly explain the observed selfishness on behalf of responders in ultimatum games favoring them in conflict. Overall, observed behavior gives rise to a context dependent interpretation of inequality aversion and to Knez and Camerer's 1995 observation that subjects form 'egocentric assessments of fairness'.

Suggested Citation

  • Sven Fischer, 2005. "Inequality Aversion in Ultimatum Games with Asymmetric Conflict Payoffs - A Theoretical and Experimental Analysis -," Papers on Strategic Interaction 2005-36, Max Planck Institute of Economics, Strategic Interaction Group.
    • Handle: RePEc:esi:discus:2005-36
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    2. Heike Hennig-Schmidt & Bernd Irlenbusch & Rainer Michael Rilke & Gari Walkowitz, 2018. "Asymmetric outside options in ultimatum bargaining: a systematic analysis," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 301-329, March.

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