Expressing Emotion and Fairness Crowding-Out in an Ultimatum Game with Incomplete Information

Abstract

Abstract:Recent experimental research has shown that when rating systems are available, buyers are more generous in accepting unfair offers made by sellers. It has also shown that sellers make fairer decisions when they are rated, while some studies show that they are little affected by the rating systems. These studies are conducted under complete information settings. However, asymmetric information about the values of traded commodities between sellers and buyers may change their perception of fairness and thus may change sellers' decisions. We conduct ultimatum game experiments in which only the sellers are informed of the size of pies. We find that when rating systems are available to the buyers, the buyers become more amenable to potentially unfair offers.We also find that sellers attempt to sell the commodity at higher prices, taking advantage of the buyers' openness to potentially unfair offers, contrary to the past studies with complete information.Keywords: Experiments, Ultimatum Game, Incomplete Information, Emotion, Rating, Social Approval, Social Disapproval. JEL classification codes: C91, D03, D82, M21* Correspondence author: kenju.kamei@gmail.com, kkamei@bgsu.edu. TEL: +1-419-372-6868. This project was supported by a grant from Murata Science Foundation. We thank Kyoo H. Kim, Louis Putterman, Pedro Dal Bó, and the seminar audience at Bowling Green State University for helpful comments. 2 Research highlights We experimentally study ultimatum games where only the sellers are informed of the size of the pie. The buyers are more open to potentially unfair offers when they are given opportunities to rate their matched sellers. The sellers make more unfair offers when the buyers are given opportunities to rate them.3

Promoting Competition or Helping Less-Endowed? An Experiment on Collective Institutional Choices Under Intra-Group Inequality

“…Recent research has found that democratic decision processes may raise people's pro-social behavior through a number of ways including the effects of signals sent through voting and the democracy premium (e.g., Dal Bó et al 2010, Tyran and Feld 2006, Kamei 2014. We could therefore expect that the presence of the endogenous process may drive their votes for the public good, assuming that some subjects have non-standard preferences and may enjoy a higher level of mutual cooperation when the public good regime is endogenously imposed.…”