Abstract
This paper offers further experimental evidence on the nature of fair behaviour, investigating the effects of different splitting options on offers and rejection rates of low offers in ultimatum games. The experiment provides a robustness check of the validity of the results in the literature concerning the behaviour of the proposer and questions the reliability of interdependent preferences for explaining rejection rates. We test whether the introduction of a 50–50 splitting option combined with observability by a third-party may have an impact on offers and rejection rates of low offers. We find similar results as previous studies regarding the impact on offers by introducing the 50–50 option, consistent with a “regard for others” effect. We show that the impact appears to be enhanced by introducing observability, consistent with a “regard by others” effect. Introducing a 50–50 splitting option seems to increase the rejection rate for low offers as in previous studies, but turns out not significant. The introduction of the 50–50 option combined with observability may have some impact on the rejection rate, albeit not highly significant.
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Notes
Since FFF do not consider observability, a direct comparison here is not possible.
An impunity game is similar to an ultimatum game, except that in case of rejection by the receiver, this has no effect on the proposer, who always keeps the share she originally being awarded herself. For instance, Bolton and Zwick (1995) show that, regardless of the minimum split is either 5% or 45% of the pie, proposers in an impunity game demonstrate an unwillingness to leave anything more than the minimum.
Social distance may be defined as “the degree of reciprocity that subjects believe exist within a social interaction” (Hoffman et al. 1996, p. 654). On identification, see in particular experiments that build upon the “identifiable victim effect” (Schelling 1968) and manipulate the modalities of identification (Burnham 2003; Bohnet and Frey 1999), by varying the singularity of the victim (Kogut and Ritov 2005) or by revealing names of counterparts in dictator or ultimatum games (Charness and Gneezy 2008).
In particular, they refer to Glaucon’s view illustrated with the tale of the shepherd Gyges who finds a ring that enables him to become invisible and act unjustly without anybody ever knowing. This view is contrasted to Socrates’ claim that an individual acts just for its own sake rather than for its appearance.
This amounts corresponds to the average of the maximum the responder can obtain when accepting the offer and what is obtained when rejecting it.
This means that the pie to be divided, equal to 5 euros, is equal to 6.17 USD in terms of purchasing power parity (PPP) at the time of our experiment. For comparison, the pie to be divided in FFF is 8 CHF or 5.55 USD per game at the time of their experiment.
We may ask if the difference in differences illustrated by the different heights of the grey and white bars in the left panels of Figs. 3 and 4 are significant. The answer is likely no. A heuristic argument without further testing based on regression analysis is the following: The 11%-points larger decrease with observability in Fig. 3 is mainly driven by the difference between T1 and T3 since T0 and T2 are almost equal. But this difference is not significant according to last column in Table 3 (one-sided p value 0.200). The other differences between relevant bars in Figs. 3 and 4 are in the same ballpark and therefore appear too small to be well identified in our data.
This casts some doubts on the use of the strategy method and by implication on the results in FFF. On the other hand, it does not seem that Güth et al. (2001) have used monetary incentives in their experiment as opposed to the standard procedure in economic experiments.
For evidence, see, e.g., McDonald et al. (2013).
To test for the robustness of our results to the type of payment of the observer, we conducted another treatment labelled T5, which is similar to T3 except for the payment of the observer that is exactly of the same amount but conditional on acceptance by the responder, otherwise equal to zero. We found no statistical significant difference of rejecting low offers by responders when we compared T3 and T5 (two-sided p value = 1.000). Unsurprisingly, the difference is significant at the 10 percent level when we compared T1 and T5 (two-sided p value = 0.065), just as it was when we compared T1 and T3.
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A first version of this paper was co-authored with Pierre Garrouste, my colleague and partner in life, who died in August 21st 2016 in Nice after a 2-year struggle against cancer. The author is also grateful to Giuseppe Attanasi, Ernst Fehr, John Hey, Nikos Nikiforakis, Stein Østbye, Marie-Claire Villeval and anonymous referees for their insightful comments and suggestions.
Appendix: Instructions
Appendix: Instructions
All instructions are translated from French. Original instructions are available on request. Note that instructions for treatment T0 and T1 only are given in detail.
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Festré, A. On the Nature of Fair Behaviour: Further Evidence. Homo Oecon 36, 193–207 (2019). https://doi.org/10.1007/s41412-019-00084-7
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DOI: https://doi.org/10.1007/s41412-019-00084-7