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Revealing Preferences for Fairness in Ultimatum Bargaining

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  • James Andreoni
  • Marco Castillo
  • Ragan Petrie

Abstract

The ultimatum game has been the primary tool for studying bargaining behavior in recent years. However, not enough information is gathered in the ultimatum game to get a clear picture of respondersâ?? utility functions. We analyze a convex ultimatum game in which respondersâ?? can â??shrinkâ? an offer as well as to accept or reject it. This allows us to observe enough about respondersâ?? preferences to estimate utility functions. We then successfully use data collected from convex ultimatum games to predict behavior in standard games. Our analysis reveals that rejections can be â??rationalizedâ? with neo-classical preferences over own- and other-payoff that are convex, nonmonotonic, and regular. These findings present a precise benchmark for models of fairness and bargaining.

Suggested Citation

  • James Andreoni & Marco Castillo & Ragan Petrie, 2005. "Revealing Preferences for Fairness in Ultimatum Bargaining," Experimental Economics Center Working Paper Series 2006-21, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:exc:wpaper:2006-21
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    Cited by:

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    2. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June.
    3. James Andreoni & Emily Blanchard, 2006. "Testing subgame perfection apart from fairness in ultimatum games," Experimental Economics, Springer;Economic Science Association, vol. 9(4), pages 307-321, December.
    4. Abigail Barr & Chris Wallace & Jean Ensminger & Juan Camilo Cárdenas, 2009. "Homo Aqualis: A Cross-Society Experimental Analysis of Three Bargaining Games," Documentos CEDE 5427, Universidad de los Andes, Facultad de Economía, CEDE.
    5. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer;Economic Science Association, vol. 14(4), pages 519-546, November.
    6. James Andreoni, 2006. "Giving Gifts to Groups: How Congestible is Altruism?," Levine's Bibliography 321307000000000166, UCLA Department of Economics.

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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