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On Perceptions of Fairness: The Role of Valuations, Outside Options, and Information in Ultimatum Bargaining Games

Published online by Cambridge University Press:  14 March 2025

Pamela M. Schmitt
Pamela M. Schmitt*
Affiliation:
United States Naval Academy, Department of Economics, 589 McNair Road 10-D, Annapolis, MD 21402, USA
*
email: pschmitt@usna.edu
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Abstract

This study examines fairness perceptions in ultimatum bargaining games with asymmetric payoffs, outside options, and different information states. Fairness perceptions were dependent on treatment conditions. Specifically, when proposers had higher chip values, dollar offers were lower than when responders had higher chip values. When responders had an outside option, offers were higher and were rejected less often than when proposers had an outside option. However, a given offer was rejected more often when responders had an outside option. Therefore, similar to the first mover advantage, the “advantaged” or “entitled” player received a higher monetary payoff than they would otherwise. When there was complete information about payoff amounts (payoff conversion rates and outside options), rejections occurred more often, and given offer amounts were rejected more often than when there was incomplete information. When there was incomplete information, offers were higher in the initial rounds than in the final rounds. These results suggest that proposers made offers strategically, making offers that would not be rejected, rather than out of a concern for fairness.

Keywords

ultimatum gamesbargainingexperimentsfairness

JEL classification

D63: Equity, Justice, Inequality, and Other Normative Criteria and Measurement D64: Altruism • Philanthropy • Intergenerational Transfers C78: Bargaining Theory • Matching Theory C91: Laboratory, Individual Behavior C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 7 , Issue 1 , February 2004 , pp. 49 - 73
Copyright
Copyright © 2004 Economic Science Association

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