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Other Regarding Preferences: Outcomes, Intentions, or Interdependence

  • Halevy, Yoram
  • Peters, Michael

The Ultimatum Game seems to be the ideal experiment to test for the structure of preferences or the sequential rationality assumptions underlying subgame perfection. We study the theoretical implications of introducing the possibility of misconceptions - that actions may potentially affect continuation payoffs - and show that the set of Perfect Bayesian Nash Equilibria does not converge to the subgame perfect equilibrium when the possibility of misconception approaches zero. The perfect equilibria studied corresponds qualitatively to the experimental findings of offers made and unfair offers rejected.

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Paper provided by Vancouver School of Economics in its series working papers with number peters-07-03-31-11-46-48.

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Length: 26 pages
Date of creation: 31 Mar 2007
Date of revision: 24 Jun 2009
Handle: RePEc:ubc:pmicro:peters-07-03-31-11-46-48
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