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Ultimatums and Tantrums: A Resource Sharing Experiment

John Janmaat ()

Experimental from EconWPA

Abstract: The ultimatum game experiment has a long history in experimental economics. In-vivo ultimatum like strategic settings often involve uncertain rejection and payoff reversals. This paper presents the results of an ultimatum like experiment extended to reflect characteristics of a shared international river, in particular where a downstream nation has the potentially payoff reversing strategy option of a military strike. Subjects implicitly split an endowment between water consuming and security enhancing investments, where relative security investments determine the probability of the payoff reversal, with one subject being able to purchase a gamble to reverse the payoffs. Maximin, folk, and Nash solutions are compared, with results suggesting that behavior is responding to folk theorem like incentives. Dynamic analyses support this by showing no significant relationship between the gamble choice and its single period rationality.

Keywords: Resource Economics; Peace Economics; Experimental Economics; Applied Game Theory (search for similar items in EconPapers)
JEL-codes: C7 C9 N4 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: 2005-12-07
Note: Type of Document - pdf; pages: 32
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpex:0512004

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