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An empirical study of determinants in decision-making process

  • Aurélie Bonein

This paper presents a new social utility model, which highlights determinants in decision-making process when individuals are in strategic interactions by means of take-it-or-leave-it offer. In our model, the decision-maker seeks to maximize her utility function which depends both on her monetary payoff and payoffs differences between all individuals. We confront the predictions of our model with experimental regularities. We model decisions of player with a veto power by a dummy variable. In particular, we test the assumptions of the model with data obtained in a previous three-player dictator-ultimatum game experiment (Bonein, Serra, 2004). Regression and stepwise procedure allow us to confirm importance of personal payoff and existence of disadvantageous inequality aversion. However, our results dispute advantageous inequality aversion proposed by Fehr, Schmidt (1999). Moreover, advantageous inequality between others players becomes relevant. This last motivation was forgotten in inequality aversion models. This model decreases the importance of fairness motivation in rejection of positive offer. We show that motivation can be selfishness: the decision-maker seeks to maximize a particular utility function.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2006-10.pdf
File Function: First version, 2006
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Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 06-10.

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Length: 31 pages
Date of creation: Oct 2006
Date of revision: Oct 2006
Handle: RePEc:lam:wpaper:06-10
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  1. Dufwenberg, M. & Kirchsteiger, G., 1998. "A Theory of Sequential Reciprocity," Discussion Paper 1998-37, Tilburg University, Center for Economic Research.
  2. 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.
  3. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  4. Bethwaite, Judy & Tompkinson, Paul, 1996. "The ultimatum game and non-selfish utility functions," Journal of Economic Psychology, Elsevier, vol. 17(2), pages 259-271, April.
  5. Gary E. Bolton & Axel Ockenfels, 2002. "A stress test of fairness measures in models of social utility," Papers on Strategic Interaction 2002-29, Max Planck Institute of Economics, Strategic Interaction Group.
  6. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  7. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  8. Brandts, J. & Charness, G., 1998. "Hot Vs. Cold: Sequential Responses and Preference Stability in Experimental Games," UFAE and IAE Working Papers 424.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  9. Kohler, Stefan, 2011. "Altruism and fairness in experimental decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 101-109.
  10. Hill, Sarah A. & Neilson, William, 2007. "Inequality aversion and diminishing sensitivity," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 143-153, April.
  11. Bonein, Aurélie & Serra, Daniel, 2007. "Another experimental look at reciprocal behavior: indirect reciprocity," MPRA Paper 3257, University Library of Munich, Germany, revised Mar 2007.
  12. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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