Ultimatums in two-person bargaining with one-sided uncertainty: Demand games

Rapoport, Anatol; Sundali, James A.; Seale, Darryl A.

doi:10.1016/s0167-2681(96)00856-6

Cited by 65 publications

(35 citation statements)

References 9 publications

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“…Abbink and Herrimann (2011) found that uncertainty led to antisocial behavior. Previous trust experiments similarly show variability and uncertainty lead to lower levels of trust (Croson 1996, Rapoport et al 1996, Kanagaretnam et al 2010). We cannot be certain about the processes that underpin our contradictory findings.…”

Section: Discussionmentioning

confidence: 70%

“…In ultimatum games, one player transfers a proportion of a reward to a second player, who then decides if both players are allowed to keep their allocations. Where the second player does not know the total size of the reward, the amount offered decreases as uncertainty increases (Croson 1996, Rapoport et al 1996. In trust or investment games, one player transfers an amount to a second player.…”

Section: Introductionmentioning

confidence: 99%

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Economic Behavior in the Face of Resource Variability and Uncertainty

McAllister¹,

Tisdell²,

Reeson³

et al. 2011

E&S

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ABSTRACT. Policy design is largely informed by the traditional economic viewpoint that humans behave rationally in the pursuit of their own economic welfare, with little consideration of other regarding behavior or reciprocal altruism. New paradigms of economic behavior theory are emerging that build an empirical basis for understanding how humans respond to specific contexts. Our interest is in the role of human relationships in managing natural resources (forage and livestock) in semiarid systems, where spatial and temporal variability and uncertainty in resource availability are fundamental system drivers. In this paper we present the results of an economic experiment designed to explore how reciprocity interacts with variability and uncertainty. This behavior underpins the Australian tradable grazing rights, or agistment, market, which facilitates livestock mobility as a human response to a situation where rainfall is so variable in time and space that it is difficult to maintain an economically viable livestock herd on a single management unit. Contrary to expectations, we found that variability and uncertainty significantly increased transfers and gains from trade within our experiment. When participants faced variability and uncertainty, trust and reciprocity took time to build. When variability and uncertainty were part of the experiment trust was evident from the onset. Given resource variability and uncertainty are key drivers in semiarid systems, new paradigms for understanding how variability shapes behavior have special importance.

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Section: Discussionmentioning

confidence: 70%

Section: Introductionmentioning

confidence: 99%

Economic Behavior in the Face of Resource Variability and Uncertainty

McAllister¹,

Tisdell²,

Reeson³

et al. 2011

E&S

View full text Add to dashboard Cite

show abstract

“…Notwithstanding, the predicted fairness (at the Golden Ratio) was shown to account quite nicely for the levels of fairness observed in many ultimatum and CPR games. We have also shown elsewhere [70] that the theory is successful in predicting the results of several variants of the ultimatum game, including a three-person ultimatum game with uncertainty regarding the identity of the responder [14], a modified ultimatum game with varying veto power [7], and an ultimatum game with one-sided uncertainty about the "pie" size [71]. In addition, the theory was shown to yield good predicting of the players' decisions in the prisoner's dilemma game and in the public goods game with punishment (see [72]).…”

Section: Summary and Concluding Remarksmentioning

confidence: 66%

Economic Harmony: An Epistemic Theory of Economic Interactions

Suleiman

2017

Games

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Abstract:We propose an epistemic theory of micro-economic interactions, termed Economic Harmony. In the theory, we modify the standard utility, by changing its argument from the player's actual payoff, to the ratio between the player's actual payoff and his or her aspired payoff. We show that the aforementioned minor epistemic modification of the concept of utility is quite powerful in generating plausible and successful predictions of experimental results, obtained in the standard ultimatum game, and the sequential common pool resource dilemma (CPR) game. Notably, the cooperation and fairness observed in the studied games are accounted for without adding an other-regarding component in the players' utility functions. For the standard ultimatum game, the theory predicts a division of φ and 1 − φ, for the proposer and responder, respectively, where φ is the famous Golden Ratio (≈0.618), most known for its aesthetically pleasing properties. We discuss possible extensions of the proposed theory to repeated and evolutionary ultimatum games.

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“…A better procedure would be to use PAS, because it is incentive compatible for income models, and modeling wealth effects (required in repeated games analysis) is less challenging than modeling cross-task contamination and portfolio effects. Rapoport et al (1996) experiment with ultimatum games in which the size of the pie is known to the proposer but a random variable with a uniform distribution for the responder. Subjects make multiple decisions as both proposers and responders.…”

Section: Examples Of Experiments On Public Goods and Votingmentioning

confidence: 99%

Paradoxes and mechanisms for choice under risk

2014

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Experiments on choice under risk typically involve multiple decisions by individual subjects. The choice of mechanism for selecting decision(s) for payoff is an essential design feature unless subjects isolate each one of the multiple decisions. We report treatments with different payoff mechanisms but the same decision tasks. The data show large differences across mechanisms in subjects' revealed risk preferences, a clear violation of isolation. We illustrate the importance of these mechanism effects by identifying their implications for classical tests of theories of decision under risk. We discuss theoretical properties of commonly used mechanisms, and new mechanisms introduced herein, in order to clarify which mechanisms are theoretically incentive compatible for which theories. We identify behavioral properties of some mechanisms that can introduce bias in elicited risk preferences-from cross-task contaminationeven when the mechanism used is theoretically incentive compatible. We explain that selection of a payoff mechanism is an important component of experimental design in many topic areas including social preferences, public goods, bargaining, and choice under uncertainty and ambiguity as well as experiments on decisions under risk.

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Ultimatums in two-person bargaining with one-sided uncertainty: Demand games

Cited by 65 publications

References 9 publications

Economic Behavior in the Face of Resource Variability and Uncertainty

Economic Behavior in the Face of Resource Variability and Uncertainty

Economic Harmony: An Epistemic Theory of Economic Interactions

Paradoxes and mechanisms for choice under risk

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