LEEM Seminar - Nicolaas Vriend (School of Economics and Finance, Queen Mary University of London, UK)

On the Stochasticity of Ultimatum Games
LEEM Seminar - Nicolaas Vriend (School of Economics and Finance, Queen Mary University of London, UK)

Nicolaas Vriend

Quand ? Le 20-12-2019,
de 10:00 à 12:00
Où ? Salle SCI - ISEM
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Title: On the Stochasticity of Ultimatum Games

Authors: Tianxiao Qi (School of Systems Science, Beijing Normal University, Beijing), Bin Xu (School of Economics, Zhejiang Gongshang University, Hangzhou, 310018, China, and Experimental Social Science Laboratory, Zhejiang University, Hangzhou), Jinshan Wu (School of Systems Science, Beijing Normal University, Beijing) and Nicolaas J. Vriend

Abstract: Brenner and Vriend (2006) argued (experimentally and theoretically) that one should not expect proposers in ultimatum games to learn to converge to the subgame perfect Nash equilibrium offer, as finding the optimal offer is a hard learning problem for (boundedly-rational) proposers. In this paper we show that providing the proposers with given (fixed) acceptance probabilities (effectively eliminating the learning task) leads to somewhat lower offers, but still substantially above the payoff-maximizing offer. By using a Probability Matching test and a risk-attitude test, we show experimentally that the proposers' ability to interpret and deal with probabilities may matter, as well as their attitude with respect to risk. We argue that the lack of convergence to the optimal (minimal) offers in ultimatum games may be largely related to the inherent stochasticity of typical Ultimatum Game experiments. We conjecture that the UG is not the only game for which this is the case. Thus, we highlight an alternative possible cause of deviations from the optimal (minimal) offers in ultimatum games.

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