Disapproval Aversion or Inflated Inequity Acceptance? The Impact of Expressing Emotions in Ultimatum Bargaining

Josie I Chen () and Kenju Kamei

No 2017_10, Department of Economics Working Papers from Durham University, Department of Economics

Abstract: Past experimental research has shown that when rating systems are available, buyers are more generous in accepting unfair offers in ultimatum bargaining. But it at the same time suggests that sellers behave more fairly to avoid receiving negative feedbacks. This paper experimentally studies which effect is stronger with a rating system: buyers’ inflated inequity acceptance or sellers’ disapproval aversion. We explore this question by varying the information condition on buyers’ side. Our experiment shows that in the setup where the size of pie is common knowledge to both buyers and sellers, when a rating system is present, the sellers exhibit disapproval aversion but the buyers do not raise inequity acceptance. But on the other hand, when only sellers are aware of the size of the pie, sellers behave aggressively to exploit buyers and their behaviors do not change by the presence of a rating system, but instead, buyers raise inequity acceptance significantly with the rating system present. We discuss that these results can be explained by a theoretical model with sellers’ social disapproval aversion and buyers’ disappointment aversion, along with the players’ inequality aversion.

Keywords: experiment; ultimatum game; emotion; rating; disapproval aversion (search for similar items in EconPapers)
JEL-codes: C91 D03 D82 M21 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-cbe, nep-cta and nep-exp
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Journal Article: Disapproval aversion or inflated inequity acceptance? The impact of expressing emotions in ultimatum bargaining (2018)
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