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On the Behavior of Proposers in Ultimatum Games

Author

Listed:
  • Thomas Brenner

    (Max Planck Institute, Jena)

  • Nicolaas J. Vriend

    (Queen Mary, University of London)

Abstract

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff-maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.

Suggested Citation

  • Thomas Brenner & Nicolaas J. Vriend, 2003. "On the Behavior of Proposers in Ultimatum Games," Working Papers 502, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:502
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    References listed on IDEAS

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    16. David Cooper & Nick Feltovich & Alvin Roth & Rami Zwick, 2003. "Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games," Experimental Economics, Springer;Economic Science Association, vol. 6(2), pages 181-207, October.
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    Cited by:

    1. Reuben, Ernesto & van Winden, Frans, 2010. "Fairness perceptions and prosocial emotions in the power to take," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 908-922, December.
    2. Saima Naeem & Asad Zaman, 2014. "Gender and Ultimatum in Pakistan: Revisited," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(1), pages 1-14.
    3. 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.
    4. Qi, Tianxiao & Xu, Bin & Wu, Jinshan & Vriend, Nicolaas J., 2022. "On the Stochasticity of Ultimatum Games," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 227-254.
    5. Boyu Zhang, 2013. "Social Learning in the Ultimatum Game," PLOS ONE, Public Library of Science, vol. 8(9), pages 1-6, September.
    6. Alan Schwartz, 2008. "How Much Irrationality Does the Market Permit?," The Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 131-159, January.

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    More about this item

    Keywords

    Ultimatum game; Non-equilibrium behavior; Laboratory experiment; Multi-armed bandit; Optimal learning; Gittins index; Bounded rationality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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