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American Economic Review: Vol. 101 No. 7 (December 2011)

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Stakes Matter in Ultimatum Games

Article Citation

Andersen, Steffen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List. 2011. "Stakes Matter in Ultimatum Games." American Economic Review, 101(7): 3427-39.

DOI: 10.1257/aer.101.7.3427

Abstract

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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Authors

Andersen, Steffen (Copenhagen Business School)
Ertaç, Seda (Koc U)
Gneezy, Uri (U CA, San Diego)
Hoffman, Moshe (U CA, San Diego)
List, John A. (U Chicago)

JEL Classifications

C72: Noncooperative Games
C78: Bargaining Theory; Matching Theory
C91: Design of Experiments: Laboratory, Individual


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