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Social Comparisons and Reference Group Formation: Some Expermental Evidence

  • Ian McDonald
  • Nikos Nikiforakis
  • Nilss Olekalns
  • Hugh Sibly

We investigate reference group formation and the impact of social comparisons on ultimatum bargaining using a laboratory experiment. Three individuals compete in a real-e¤ort task for the role of the proposer in a three-player ultimatum game. The role of the responder is randomly allocated. The third individual receives a ?fixed payment - our treatment variable - and makes no decision. The existence of a non-responder has a dramatic e¤ect on bargaining outcomes. In the most extreme treatment, more than half of the o¤ers are rejected. Behavior shows individuals exhibit self-serving bias in the way they de?ne their reference groups.

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File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0020/801137/1069.pdf
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Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1069.

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Length: 24 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:mlb:wpaper:1069
Contact details of provider: Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
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