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The Ultimatum Game: Optimal Strategies without Fairness

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  • Evans, Lewis
  • Burnell, Stephen
  • Yao, Shuntian

Abstract

The Ultimatum game is simple and this facilitates its use in the study of predictions of game theory. Experimental evidence suggests that it doesnot predict individual behavior well unless individuals gain welfarefrom fairness in transactions or have expectations about some widergame. Our model excludes any notion of fairness by including (potential)rivalry in transactions. In this game the proposer's expectations yieldoutcomes that are consistent with experimental evidence. Offers can belarge or small with none in an intermediate range. The consequent distribution appears in Dictator game experiments. Our model explains how it is generated by expectations.

Suggested Citation

  • Evans, Lewis & Burnell, Stephen & Yao, Shuntian, 1999. "The Ultimatum Game: Optimal Strategies without Fairness," Working Paper Series 19038, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19038
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19038
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    1. Costa-Gomes, Miguel & Zauner, Klaus G., 2001. "Ultimatum Bargaining Behavior in Israel, Japan, Slovenia, and the United States: A Social Utility Analysis," Games and Economic Behavior, Elsevier, vol. 34(2), pages 238-269, February.
    2. Gagen, Michael, 2013. "Isomorphic Strategy Spaces in Game Theory," MPRA Paper 46176, University Library of Munich, Germany.
    3. Gneezy, Uri & Guth, Werner & Verboven, Frank, 2000. "Presents or investments? An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 21(5), pages 481-493, October.
    4. Fang Zhong & Steven O. Kimbrough & D.J. Wu, 2002. "Cooperative Agent Systems: Artificial Agents Play the Ultimatum Game," Group Decision and Negotiation, Springer, vol. 11(6), pages 433-447, November.
    5. Rotemberg, Julio J., 2008. "Minimally acceptable altruism and the ultimatum game," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 457-476, June.
    6. Wenxin Xie & Yong Li & Yougui Wang & Keqiang Li, 2012. "Responders’ dissatisfaction may provoke fair offer," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 7(2), pages 197-207, October.

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    Keywords

    predictions; proposer expectation;

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