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Partner Selection and the Division of Surplus: Evidence from Ultimatum and Dictator Experiments

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  • Priyodorshi Banerjee

    (Economic Research Unit, Indian Statistical Institute, Kolkata 700108, India)

  • Sujoy Chakravarty

    (Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi 110067, India)

  • Sanmitra Ghosh

    (Department of Economics, Jadavpur University, Kolkata 700032, India)

Abstract

We study ultimatum and dictator environments with one-way, unenforceable pre-play communication from the proposer to the recipient, semantically framed as a promise. After observing this promise regarding how much the proposer will offer if selected, in our treatment conditions, recipients choose whether or not to select a particular proposer. We find that offers can increase in the ultimatum game both with non-competitive selection with a single potential proposer, and more so with competition, where the recipient chooses one of two potential proposers, as compared to the no selection baseline. Furthermore, the offer is rejected with higher probability if the promisemade by the selected proposer is higher than the eventual offer. Our dictator environment does not give the power to reject offers, thus selection power carries no benefits in the dictator game. Finally, independent of the game institution or proposer selection mechanism, promises provide credible signals for offers.

Suggested Citation

  • Priyodorshi Banerjee & Sujoy Chakravarty & Sanmitra Ghosh, 2016. "Partner Selection and the Division of Surplus: Evidence from Ultimatum and Dictator Experiments," Games, MDPI, vol. 7(1), pages 1-18, January.
    • Handle: RePEc:gam:jgames:v:7:y:2016:i:1:p:3-:d:62485
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    2. Priyodorshi Banerjee & P. Srikant & Sujoy Chakravarty, 2020. "Contracting Outcomes with Communication and Learning," Studies in Microeconomics, , vol. 8(1), pages 18-43, June.

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    More about this item

    Keywords

    dictator and ultimatum games; non-binding communication with intent; partner selection; competing promises; credibility and credulity; C78; C91; D03;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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