Reciprocity—An Indirect Evolutionary Analysis

Christian Korth

Chapter Chapter 3 in Fairness in Bargaining and Markets, 2009, pp 35-55 from Springer

Abstract: Abstract In experimental investigations of the ultimatum game, participants quite consistently offer 30–50% of an available monetary surplus as first-moving proposers. They reject offers of less than 20% as second-moving responders, which results in zero payoff for both players. Particularly the latter observation is hard to reconcile with the assumption that economic actors are rational maximizers of their monetary payoffs.1 However, observations can be explained very well by including a consideration for fairness and reciprocity in players’ preferences. This is also true regarding many other games for which experimental findings are puzzling from a monetary-payoff maximization point of view. Neoclassical theory does not restrict preferences to those based solely on monetary payoffs or to strict monotonicity. However, economic agents who are spiteful, enjoy a warm glow donating money to anonymous strangers, or feel it worthwhile to incur private costs to punish free-riders of public goods have not been the conventional assumption in economics. The award of 2002’s Nobel Prize to Daniel Kahneman and Vernon Smith is only one indicator that this is changing fast.

Keywords: Nash Equilibrium; Social Preference; Ultimatum Game; Evolutionarily Stable Strategy; Dictator Game (search for similar items in EconPapers)
Date: 2009
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Related works:
Journal Article: Reciprocity—an indirect evolutionary analysis (2007)
Working Paper: Reciprocity: an indirect evolutionary analysis (2003)
Working Paper: Reciprocity - an indirect evolutionary analysis (2003)
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DOI: 10.1007/978-3-642-02253-1_3

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