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American Economic Review: Vol. 93 No. 3 (June 2003)

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What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game

Article Citation

Andreoni, James, Marco Castillo, and Ragan Petrie. 2003. "What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game ." The American Economic Review, 93(3): 672-685.

DOI: 10.1257/000282803322157034

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.

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Authors

Andreoni, James
Castillo, Marco
Petrie, Ragan


American Economic Review



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