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Playing Fair: Rationality and Norm-guided Behavior in Games

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  • Markus Pasche

    (University of Jena, Faculty of Economics)

Abstract

There is robust experimental evidence that in the ultimatum game real players often prefer a fair allocation which seems to be in contrast to rational decision making. In this paper rational maximizing behavior as well as norm-guided fair behavior are two possible behavioral rules. It is argued that behavioral rules are adopted according to their expected success before the ultimatum game is played. Using the concept of behavioral equilibrium profiles it is shown that conditional to the information status the players may adopt the fair behavioral rule instead of maximizing. Furthermore, conditions are derived where maximizing and fair behavior are both parts of a behavioral equilibrium profile. Also the relation to the indirect evolutionary approach is discussed.

Suggested Citation

  • Markus Pasche, 2002. "Playing Fair: Rationality and Norm-guided Behavior in Games," Working Paper Series B 2002-02, Friedrich Schiller University of Jena, School of of Economics and Business Administration.
    • Handle: RePEc:jen:jenavo:2002-02
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Rationality; fairness; ultimatum game; behavioral equilibrium;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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