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American Economic Review Vol. 101 No. 7 2011

Stakes Matter in Ultimatum Games

Steffen Andersen1; Seda Ertaç2; Uri Gneezy3; Moshe Hoffman4; John A. List5

1 Department of Economics, Copenhagen Business School, Porcelænshaven 16A, 1, DK-2000 Frederiksberg, Denmark. · 2 Koc University, Rumeli Feneri Yolu, Sariyer, Istanbul 34450 Turkey. · 3 Rady School of Management, University of California, San Diego, 9500 Gilman Drive, La Jolla, CA 92093. · 4 Rady School of Management, University of California, San Diego, CA 92093. · 5 Department of Economics, University of Chicago, 1126 E. 59th St., Chicago, IL 60637, and NBER.

Abstract

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that elicits frequent low offers and uses much larger stakes than in the literature, we are able to examine stakes' effects over ranges of data that are heretofore unexplored. Our main result is that proportionally equivalent offers are less likely to be rejected with high stakes. In fact, our paper is the first to present evidence that as stakes increase, rejection rates approach zero. JEL: C72, C78, C91

DOI
10.1257/aer.101.7.3427
Volume
101
Issue
7
Pages
3427-3439
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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