Stakes Matter in Ultimatum Games

Steffen Andersen, Seda Ertaç, Uri Gneezy, Moshe Hoffman and John List

No 01-2011, Working Papers from Copenhagen Business School, Department of Economics

Abstract: The canonical bargaining game in economics is the ultimatum game, played by tens of thousands of students around the world over the past three decades. In the ultimatum game, first studied by Werner Guth, Rolf Schmittberger, and Bernd Schwarze (1982), the “proposer” proposes how to split a pie between herself and a “responder.” Then the responder decides whether to accept or reject this proposal. If the responder accepts, then the proposal is implemented; otherwise, both players receive nothing. For players motivated purely by monetary considerations, the standard subgame-perfect equilibrium solution implies that the proposer receives almost all of the money. In this manner, the ultimatum game represents a stylized glimpse into the underpinnings of decision-making at the heart of economics. For instance, a monopolist setting a price, a monopsonist setting a wage, or more generally any bargaining situation that has a take it or leave it element.

Keywords: game theory; decision-making; price theory (search for similar items in EconPapers)
JEL-codes: C70 D40 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-02-01
References: Add references at CitEc
Citations: View citations in EconPapers (87)

Downloads: (external link)
http://hdl.handle.net/10398/8244 Full text (application/pdf)
Full text not avaiable

Related works:
Journal Article: Stakes Matter in Ultimatum Games (2011)
Working Paper: Stakes matter in ultimatum games (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:cbsnow:2011_001

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().