Stakes Matter in Ultimatum Games

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that elicits frequent low offers and uses much larger...

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Bibliographic Details
Published in:The American economic review Vol. 101; no. 7; pp. 3427 - 3439
Main Authors: Andersen, Steffen, Ertaç, Seda, Gneezy, Uri, Hoffman, Moshe, List, John A.
Format: Journal Article
Language:English
Published: Nashville American Economic Association 01.12.2011
Subjects:
Bargaining
Dictators
Earnings
Economic costs
Economic models
Economic theory
Economics
Equivalence
Experiment design
Experimental economics
Experimental literature
Experiments
Fairness
Game theory
Games
Logistic regression
Management science
Novels
Research design
Shorter Papers
Studies
Transponders
Ultimatum game
Wealth
Wealth effect
ISSN:0002-8282, 1944-7981
Online Access:Get full text
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Summary:One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that elicits frequent low offers and uses much larger stakes than in the literature, we are able to examine stakes' effects over ranges of data that are heretofore unexplored. Our main result is that proportionally equivalent offers are less likely to be rejected with high stakes. In fact, our paper is the first to present evidence that as stakes increase, rejection rates approach zero. JEL: C72, C78, C91
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ISSN:0002-8282
1944-7981
DOI:10.1257/aer.101.7.3427