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Creating Culture in the Lab: Equilibrium Conventions in Intergenerational Ultimatum Games

Author

Listed:
  • Barry Sopher

    () (Rutgers University)

  • Andrew Schotter

    () (New York University)

Abstract

The Ultimatum Game and the experiments surrounding it, have presented economists with a puzzle that they have struggled to explain. But as Robert Aumann has pointed out, while there may be only one sub-game perfect equilibrium to the Ultimatum Game, there are an infinite number of Nash equilibria. All that is needed to maintain a non-sub-game perfect equilibrium is a set of Sender beliefs that the offer contemplated is the minimum that would be accepted and behavior on the part of the Receivers that confirms these beliefs. The only puzzle is how such a set of mutually consistent beliefs developed in the first place and how they are passed on from one generation of player to the next. Using an inter-generational game experimental setting, this paper investigates how "culture" serves as the selection mechanism which solves this puzzle. Culture is then simply a system of beliefs and self-confirming actions which support any one of these non-sub-game perfect Nash equilibria as the accepted solution to the game being played. The outcome is, as Robert Aumann has called it a "perfectly good" Nash equilibrium convention which is just not perfect.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Barry Sopher & Andrew Schotter, 2000. "Creating Culture in the Lab: Equilibrium Conventions in Intergenerational Ultimatum Games," Departmental Working Papers 200020, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:200020
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    References listed on IDEAS

    as
    1. 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.
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    7. Nyarko, Yaw & Schotter, Andrew, 1998. "An Experimental Study of Belief Learning Using Real Beliefs," Working Papers 98-39, C.V. Starr Center for Applied Economics, New York University.
    8. Gary E. Bolton & Axel Ockenfels, 1998. "Strategy and Equity: An ERC Analysis of the Guth-van Damme Game," Levine's Working Paper Archive 2060, David K. Levine.
    9. Thaler, Richard H, 1988. "The Ultimatum Game," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 195-206, Fall.
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    More about this item

    Keywords

    conventions; culture; experimental games; intergenerational games;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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