Bargaining over waiting time in ultimatum game experiments

Enforcement of Fairness Norms by Punishment: A Comparison of Gains and Losses

Although in everyday life decisions about losses are prevalent (e.g., the climate crisis and the COVID-19 crisis), there is hardly any research on decisions in the loss domain. Therefore, we conducted online experiments with a sample of 672 participants (mostly students), using third-party punishment dictator games (DGs) in the loss domain to explore the impact of losses and punishment threats on the conformity to the fairness norm. Subjects in the treatment condition have to divide a loss of -10 € with the threat of a third-party punishment with different strengths (control: gains, no punishment). Overall, the statistical evidence seems rather weak, but when it comes to losses, subjects are more rational and straightforward with their words and deeds than with gains. Therefore, in the loss domain, subjects are more likely to believe that the fairness norm should be followed, and they subjectively perceive that the others do as well. Furthermore, although dictators' decisions are more selfish in the loss domain, dictators there react more strongly to the punishment threat by reducing their demands than in the gains domain. This holds as long as the punishment threat is strong enough, as judged from a rational perspective.

Experiments on norm focusing and losses in dictator games

We conducted experiments on norm focusing. The tests were carried out with two versions of dictator games: in one version of the game, the dictator had to allocate a gain of €10, while in the other version, a loss of €-10 needs to be allocated. In a first treatment, we focused subjects on the average giving in similar previous dictator games. The second treatment focused subjects on the behaviour of what a self-interested actor should do. In total, N = 550 participants took part in our experiments. We found (1) a significant difference in giving behaviour between gain and loss treatments, with subjects being moderately more self-interested in the loss domain, (2) a significant effect of focusing subjects on the average behaviour of others, but (3) no effect of focusing subjects on the behaviour of self-interested actors.

Against the proportionality principle: Experimental findings on bargaining over losses

The outcomes of bargaining over losses, the subject of this paper, have rarely been studied. But experimental studies of related situations, such as those involving bankruptcies or bequests in which the sum of the legal claims that can be made against a bank or firm or estate are greater than their values, have produced strong support for the proportionality principle. To test whether this principle would find support in other situations involving losses we designed an experimental game in which four players start out with differing initial endowments of real money. They are then informed that a certain amount of this resource has to be given back to the experimenter. How should the loss be shared among the agents? This game was run at different locations and under different treatments over a period of almost three years. We found that the proportionality principle was rarely proposed and even less frequently accepted as a solution to this problem. One of the main reasons for this result was that the two players with the smallest endowments opposed most of the proposals which asked them to contribute at least some positive amount of their own initial resource.

Ultimatum bargaining over losses and gains - An experimental comparison

Subjects in the loss domain tend to split payoffs equally when bargaining. The ultimatum game offers an ideal mechanism through which social scientists can investigate whether equal splits are the consequence of the proposers' generosity or due to their anticipation that the responders will reject lower offers. This paper experimentally compares ultimatum bargaining that takes place in a loss domain with that under a gains domain. The results reveal that, although responders do not expect more in the loss domain, proposers do make higher offers. As such, proposers reach agreements more often in the loss domain than they do in the gains domain, and responders receive higher payoffs.

Cooperative Behavior in the Ultimatum Game and Prisoner's Dilemma Depends on Players' Contributions

Economic games such as the Ultimatum Game (UG) and Prisoner's Dilemma (PD) are widely used paradigms for studying fairness and cooperation. Monetary versions of these games involve two players splitting an arbitrary sum of money. In real life, however, people's propensity to engage in cooperative behavior depends on their effort and contribution; factors that are well known to affect perceptions of fairness. We therefore sought to explore the impact of relative monetary contributions by players in the UG and PD. Adapted computerized UG and PD games, in which relative contributions from each player were manipulated, were administered to 200 participants aged 18-50 years old (50% female). We found that players' contribution had large effects on cooperative behavior. Specifically, cooperation was greater amongst participants when their opponent had contributed more to joint earnings. This was manifested as higher acceptance rates and higher offers in the UG; and fewer defects in the PD compared to when the participant contributed more. Interestingly, equal contributions elicited the greatest sensitivity to fairness in the UG, and least frequent defection in the PD. Acceptance rates correlated positively with anxiety and sex differences were found in defection behavior. This study highlights the feasibility of computerized games to assess cooperative behavior and the importance of considering cooperation within the context of effortful contribution.

Decision-making behavior, gender differences, and cultural context variables

Following the recent call for a deeper contextualization of cross-cultural research in international management studies, this study explores differences in the decision-making behavior of men and women in Korea and Germany exposed to cultural context variables (CCVs) specific to the Korean cultural context. A two-stage research approach was designed and applied, consisting of semi-structured interviews, and used to identify cultural variables that have an important influence on decision-making in Korea (first stage), followed using these contextual variables in a series of behavioral experiments (second stage). The findings reveal that Korean men responded strongly to the contextual variables, showing either egoistic offer behavior and even rejecting advantageous offers. Surprisingly, Korean women, like German men and women, altered their decision-making behavior very little when exposed to the contextual variables. The results reveal significant gender differences in response to culture-specific contextual factors that have not previously been reported and open up new avenues for future research based on the identification and testing of specific high-impact CCVs.

Neural correlates of decision making after unfair treatment

Empirical evidence indicates that people are inequity averse. However, it is unclear whether and how suffering unfairness impacts subsequent behavior. We investigated the consequences of unfair treatment in subsequent interactions with new interaction partners and the associated neural mechanisms. Participants were experimentally manipulated to experience fair or unfair treatment in the ultimatum game (UG), and subsequently, they were given the opportunity to retaliate in the dictator game (DG) in their interactions with players who had not played a role in the previous fair or unfair treatment. The results showed that participants dictated less money to unrelated partners after frequently receiving unfair offers in the previous UG (vs. frequently receiving fair offers in the previous UG), but only when they were first exposed to unfair UG/DG. Stronger activation in the right dorsal anterior insula was found during receiving unfair offers and during the subsequent offer-considering phase. The regional homogeneity (ReHo), a measure of the local synchronization of neighboring voxels in resting-state brain activity, in the left ventral anterior insula and left superior temporal pole was positively correlated with the behavior change. These findings suggest that unfair treatment may encourage a spread of unfairness, and that the anterior insula may be not only engaged in signaling social norm violations, but also recruited in guiding subsequent adaptive behaviors.

Culture or anonymity? Differences in proposer behaviour in Korea and Germany

This study explores the proposer behaviour in an ultimatum game (UG) frame under anonymous and non-anonymous conditions among a Korean and German subject pool (n = 590) in comparison. Whereas the anonymous condition is represented by the standard UG, the non-anonymous condition integrates an aggregate of the Korean cultural context variables university affiliation, regional origin and seniority. The latter, a classic Confucian context variable, is measured by age differentials. The former two are impactful components of so-called Yongo networks, a unique Korean informal institution identical to Chinese Guanxi ties. Yongo networks, yet underrepresented in research, are said to be a central context variable to explain Korean social ties and decision-making behaviour. We observe significant differences between the offer behaviours of Korean and German subjects when exposing selected cultural variables. We argue that the behavioural differences observed are in fact due to culture not anonymity.

Conditions for the emergence of shared norms in populations with incompatible preferences

Understanding norms is a key challenge in sociology. Nevertheless, there is a lack of dynamical models explaining how one of several possible behaviors is established as a norm and under what conditions. Analysing an agent-based model, we identify interesting parameter dependencies that imply when two behaviors will coexist or when a shared norm will emerge in a heterogeneous society, where different populations have incompatible preferences. Our model highlights the importance of randomness, spatial interactions, non-linear dynamics, and self-organization. It can also explain the emergence of unpopular norms that do not maximize the collective benefit. Furthermore, we compare behavior-based with preference-based punishment and find interesting results concerning hypocritical punishment. Strikingly, pressuring others to perform the same public behavior as oneself is more effective in promoting norms than pressuring others to meet one's own private preference. Finally, we show that adaptive group pressure exerted by randomly occuring, local majorities may create norms under conditions where different behaviors would normally coexist.

Power and fairness in a generalized ultimatum game

Power is the ability to influence others towards the attainment of specific goals, and it is a fundamental force that shapes behavior at all levels of human existence. Several theories on the nature of power in social life exist, especially in the context of social influence. Yet, in bargaining situations, surprisingly little is known about its role in shaping social preferences. Such preferences are considered to be the main explanation for observed behavior in a wide range of experimental settings. In this work, we set out to understand the role of bargaining power in the stylized environment of a Generalized Ultimatum Game (GUG). We modify the payoff structure of the standard Ultimatum Game (UG) to investigate three situations: two in which the power balance is either against the proposer or against the responder, and a balanced situation. We find that other-regarding preferences, as measured by the amount of money donated by participants, do not change with the amount of power, but power changes the offers and acceptance rates systematically. Notably, unusually high acceptance rates for lower offers were observed. This finding suggests that social preferences may be invariant to the balance of power and confirms that the role of power on human behavior deserves more attention.