American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game
American Economic Review
vol. 93,
no. 3, June 2003
(pp. 672–685)
Abstract
The 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.Citation
Andreoni, 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: 10.1257/000282803322157034JEL Classification
- C78 Bargaining Theory; Matching Theory
- D64 Altruism; Philanthropy