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Learning (Not) To Yield: An Experimental Study of Evolving Ultimatum Game Behavior

Author

Listed:
  • Judith Avrahami

    (The Hebrew University of Jerusalem, Center for the Study of Rationality and School of Education)

  • Werner Güth

    () (Max Planck Institute of Economics, Strategic Interaction Group, Jena)

  • Ralph Hertwig

    (University of Basel, Department of Psychology)

  • Yaakov Kareev

    (The Hebrew University of Jerusalem, Center for the Study of Rationality and School of Education)

  • Hironori Otsubo

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena)

Abstract

Whether behavior converges toward rational play or fair play in repeated ultimatum games depends on which player yields first. If responders concede first by accepting low offers, proposers would not need to learn to offer more, and play would converge toward unequal sharing. By the same token, if proposers learn fast that low offers are doomed to be rejected and adjust their offers accordingly, pressure would be lifted from responders to learn to accept such offers. Play would converge toward equal sharing. Here we tested the hypothesis that it is regret-both material and strategic-which determines how players modify their behavior. We conducted a repeated ultimatum game experiment with random strangers, in which one treatment does and another does not provide population feedback in addition to informing players about their own outcome. Our results show that regret is a good predictor of the dynamics of play. Specifically, we will turn to the dynamics that unfold when players make repeated decisions in the ultimatum game with randomly changing opponents, and when they learn not only about their own outcome in the previous round but also find out how the population on average has adapted to previous results (path dependence).

Suggested Citation

  • Judith Avrahami & Werner Güth & Ralph Hertwig & Yaakov Kareev & Hironori Otsubo, 2010. "Learning (Not) To Yield: An Experimental Study of Evolving Ultimatum Game Behavior," Jena Economic Research Papers 2010-092, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2010-092
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. 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.
    2. repec:spr:jogath:v:46:y:2017:i:2:d:10.1007_s00182-016-0541-y is not listed on IDEAS
    3. 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.
    4. repec:wsi:igtrxx:v:16:y:2014:i:01:n:s0219198914400052 is not listed on IDEAS
    5. 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.
    6. Jianning Kong & Peter C.B. Phillips & Donggyu Sul, 2017. "Weak s- Convergence: Theory and Applications," Cowles Foundation Discussion Papers 2072, Cowles Foundation for Research in Economics, Yale University.
    7. Pablo Brañas-Garza & Debrah Meloso & Luis Miller, 2017. "Strategic risk and response time across games," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(2), pages 511-523, May.

    More about this item

    Keywords

    Ultimatum bargaining game; Reputation; Regret; Learning; Experiment;

    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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