Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game

Author: Kagel J.H.  

Publisher: Springer Publishing Company

ISSN: 1386-4157

Source: Experimental Economics, Vol.4, Iss.3, 2001-12, pp. : 203-219

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Abstract

Two recent models incorporating fairness considerations into the economics literature based on agents' concerns about the distribution of payoffs between themselves and others (Fehr-Schmidt, 1999, Quarterly Journal of Economics. 114 (3), 769–816; Bolton-Ockenfels, 2000, American Economic Review. 90, 166–193) are investigated using a new three-person ultimatum game: One person allocates a sum of money to two others, one of which is randomly chosen to accept or reject the offer. Rejection gives both the responder and the proposer zero income and a positive consolation prize for the non-responder. The data show essentially no reductions in rejection rates, holding offers constant, with and without consolation prizes, contrary to both models' predictions.