What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game
- (pp. 672-685)
AbstractThe ultimatum game, by its all-or-nothing nature, makes it difficult to discern what kind of preferences may be generating choices. We explore a game that convexifies the decisions, allowing us a better look at the indifference curves of bargainers while maintaining the subgame-perfect equilibrium. We conclude that bargainers' preferences are convex and regular but not always monotonic. Money-maximization is the sole concern for about half of the subjects, while the other half reveal a preference for fairness. We also found, unexpectedly, the importance of risk aversion among money-maximizing proposers, which in turn generates significant bargaining power for fair-minded responders.
CitationAndreoni, James, Marco Castillo, and Ragan Petrie. 2003. "What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game ." American Economic Review, 93 (3): 672-685. DOI: 10.1257/000282803322157034
- C78 Bargaining Theory; Matching Theory
- D64 Altruism; Philanthropy