Playing Fair: Rationality and Norm-guided Behavior in Games

Markus Pasche

Working Paper Series B from Friedrich Schiller University of Jena, School of of Economics and Business Administration

Abstract: There is robust experimental evidence that in the ultimatum game real players often prefer a fair allocation which seems to be in contrast to rational decision making. In this paper rational maximizing behavior as well as norm-guided fair behavior are two possible behavioral rules. It is argued that behavioral rules are adopted according to their expected success before the ultimatum game is played. Using the concept of behavioral equilibrium profiles it is shown that conditional to the information status the players may adopt the fair behavioral rule instead of maximizing. Furthermore, conditions are derived where maximizing and fair behavior are both parts of a behavioral equilibrium profile. Also the relation to the indirect evolutionary approach is discussed.

Keywords: Rationality; fairness; ultimatum game; behavioral equilibrium (search for similar items in EconPapers)
JEL-codes: C70 C72 C78 D63 (search for similar items in EconPapers)
Date: 2002-08-28
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Persistent link: https://EconPapers.repec.org/RePEc:jen:jenavo:2002-02

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