IDEAS home Printed from https://ideas.repec.org/p/tky/fseres/2011cf790.html
   My bibliography  Save this paper

Investment and Ultimatum Games: Experiments

Author

Listed:
  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

  • Toshihiko Shima

    (Graduate School of Economics, University of Tokyo)

Abstract

This paper examines the ultimatum game preceded by a single player's investment decision that is risky in that the business opportunity could fail to be discovered. The experiment's results show that the functioning of social preference connecting the baseline ultimatum game with the investment crucially depends on the model's specifications, such as whether the proposer or the responder is the investor or the riskiness of the investment. The noninvestor/proposer tends to act in consideration of the efficiency of the investment, but not its riskiness. Such tendencies of the noninvestor's/proposer's social preferences are diametrically opposite to that of the investor/proposer.

Suggested Citation

  • Hitoshi Matsushima & Toshihiko Shima, 2011. "Investment and Ultimatum Games: Experiments," CIRJE F-Series CIRJE-F-790, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2011cf790
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2011/2011cf790.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Tore Ellingsen & Magnus Johannesson, 2004. "Promises, Threats and Fairness," Economic Journal, Royal Economic Society, vol. 114(495), pages 397-420, April.
    3. Ernst Fehr & Klaus M. Schmidt, "undated". "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
    4. Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, 2008. "Fairness and the Optimal Allocation of Ownership Rights," Economic Journal, Royal Economic Society, vol. 118(531), pages 1262-1284, August.
    5. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    6. Bengt Holmstrom & John Roberts, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 73-94, Fall.
    7. Grout, Paul A, 1984. "Investment and Wages in the Absence of Binding Contracts: A Nash Bargining Approach," Econometrica, Econometric Society, vol. 52(2), pages 449-460, March.
    8. Tore Ellingsen & Magnus Johannesson, 2004. "Is There a Hold‐up Problem?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 475-494, October.
    9. Hackett, Steven C, 1994. "Is Relational Exchange Possible in the Absence of Reputations and Repeated Contact?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 360-389, October.
    10. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
    11. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
    12. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    13. Gantner, Anita & Guth, Werner & Konigstein, Manfred, 2001. "Equitable choices in bargaining games with joint production," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 209-225, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yadi Yang, 2021. "A Survey Of The Hold‐Up Problem In The Experimental Economics Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(1), pages 227-249, February.
    2. Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
    3. Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, 2008. "Fairness and the Optimal Allocation of Ownership Rights," Economic Journal, Royal Economic Society, vol. 118(531), pages 1262-1284, August.
    4. Eisenkopf, Gerald & Nüesch, Stephan, 2017. "Trust in third parties," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 410-427.
    5. Hoppe, Eva I. & Schmitz, Patrick W., 2011. "Can contracts solve the hold-up problem? Experimental evidence," Games and Economic Behavior, Elsevier, vol. 73(1), pages 186-199, September.
    6. Kaiming Zheng & Xiaoyuan Wang & Debing Ni & Yang Yang, 2020. "Reciprocity and Veto Power in Relation-Specific Investments: An Experimental Study," Sustainability, MDPI, vol. 12(10), pages 1-19, May.
    7. Ellingsen, Tore & Johannesson, Magnus, 2005. "Sunk costs and fairness in incomplete information bargaining," Games and Economic Behavior, Elsevier, vol. 50(2), pages 155-177, February.
    8. Kusterer, David J. & Schmitz, Patrick W., 2017. "The management of innovation: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 104(C), pages 706-725.
    9. von Siemens, Ferdinand A., 2009. "Bargaining under incomplete information, fairness, and the hold-up problem," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 486-494, August.
    10. Ernan Haruvy & Elena Katok & Zhongwen Ma & Suresh Sethi, 2019. "Relationship-specific investment and hold-up problems in supply chains: theory and experiments," Business Research, Springer;German Academic Association for Business Research, vol. 12(1), pages 45-74, April.
    11. Wichardt, Philipp C. & Schunk, Daniel & Schmitz, Patrick W., 2009. "Participation costs for responders can reduce rejection rates in ultimatum bargaining," Economics Letters, Elsevier, vol. 103(1), pages 33-35, April.
    12. Antinyan, Armenak & Corazzini, Luca & D'Agostino, Elena & Pavesi, Filippo, 2023. "Watch your words: An experimental study on communication and the opportunity cost of delegation," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 216-232.
    13. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    14. Tore Ellingsen & Magnus Johannesson, 2004. "Is There a Hold‐up Problem?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 475-494, October.
    15. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    16. Yutaka Kayaba & Hitoshi Matsushima & Tomohisa Toyama, 2016. "Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring: Experiments and Theory," CARF F-Series CARF-F-381, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    17. Andrew M. Davis & Stephen Leider, 2018. "Contracts and Capacity Investment in Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 20(3), pages 403-421, July.
    18. Faravelli, Marco & Kirchkamp, Oliver & Rainer, Helmut, 2013. "The effect of power imbalances on incentives to make non-contractible investments," European Economic Review, Elsevier, vol. 61(C), pages 169-185.
    19. Hodaka Morita & Maroš Servátka, 2018. "Investment in Outside Options as Opportunistic Behavior: An Experimental Investigation," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 457-484, October.
    20. Beck, Adrian & Kerschbamer, Rudolf & Qiu, Jianying & Sutter, Matthias, 2010. "Guilt from Promise-Breaking and Trust in Markets for Expert Services – Theory and Experiment," Working Papers in Economics 436, University of Gothenburg, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2011cf790. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CIRJE administrative office (email available below). General contact details of provider: https://edirc.repec.org/data/ritokjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.