Advertisement

Experimental Economics

, Volume 6, Issue 2, pp 181–207 | Cite as

Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games

  • David J. Cooper
  • Nick Feltovich
  • Alvin E. Roth
  • Rami Zwick
Article

Abstract

Learning models predict that the relative speed at which players in a game adjust their behavior has a critical influence on long term behavior. In an ultimatum game, the prediction is that proposers learn not to make small offers faster than responders learn not to reject them. We experimentally test whether relative speed of learning has the predicted effect, by manipulating the amount of experience accumulated by proposers and responders. The experiment allows the predicted learning by responders to be observed, for the first time.

Game Theory learning bargaining 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Blackburn, J.M. (1936). “Acquisition of Skill: An Analysis of Learning Curves.” IHRB Report No. 73.Google Scholar
  2. Bolton, G. (1991). “A Comparative Model of Bargaining: Theory and Evidence.” American Economic Review. 81, 1096–1136.Google Scholar
  3. Bolton, G.E. and Ockenfels, A. (1999). “ERC: A Theory of Equity, Reciprocity and Competition.” American Economic Review, forthcoming.Google Scholar
  4. Bornstein, G., Erev, I., and Goren, H. (1994). Learning processes and reciprocity in intergroup conflicts. Journal of Conflict Resolution. 38, 690–707.Google Scholar
  5. Bornstein, G., Winter, E., and Goren, H. (1996). “Experimental Study of Repeated Team Games.” European Journal of Political Economy Volume 12, Issue 4, 17-December-1996.Google Scholar
  6. Cooper, D.J., Garvin, S., and Kagel, J.H. (1997). “Adaptive Learning versus Equilibrium Refinements in an Entry Limit Pricing Game.” Economic Journal. 107, 553–575.Google Scholar
  7. Cooper, D.J., Feltovich, N., Roth, A.E., and Zwick, R. (1999). “Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games.” Working Paper.Google Scholar
  8. Cooper, D.J. and Stockman, C.K. (2002). “Fairness and Learning in a Step-Level Public Goods Game.” Games and Economic Behavior. 41, 26–45.Google Scholar
  9. Duffy, J. and Feltovich, N. (1999). “Does Observation of Others Affect Learning in Strategic Environments? An Experimental Study.” International Journal of Game Theory. 28, 131–152.Google Scholar
  10. Erev, I. (1998). “Signal Detection by Human Observers: ACutoff Reinforcement Learning Model of Categorization Decisions Under Uncertainty. Psychological Review. 105, 280–298.Google Scholar
  11. Erev, I. and Rapoport, A. (1998). “Magic, Reinforcement Learning and Coordination in a Market Entry Game.” Games and Economic Behavior. 23, 146–175.Google Scholar
  12. Erev, I. and Roth, A.E. (1998). “Predicting how people play games: Reinforcement learning in experimental games with unique, mixed strategy equilibria,” American Economic Review. 88(4), 848–881.Google Scholar
  13. Erev, I., Roth, A.E., Slonim, R.L., and Barron, G. “Combining a Theoretical Prediction with Experimental Evidence.” Revised 2002.Google Scholar
  14. Fehr, E. and Schmidt, K.M. (1999). “A Theory of Fairness, Competition, and Cooperation.” Quarterly Journal of Economics. 114, 817–868.Google Scholar
  15. Feltovich, N. (2000). “Reinforcement-Based vs. Beliefs-Based Learning Models in Experimental Asymmetric-Information Games.” Econometrica. 68, 605–641.Google Scholar
  16. Forsythe, R., Horowitz, J., Savin, N.E., and Sefton, M. (1994). “Fairness in Simple Bargaining Experiments.” Games and Economic Behavior. 6, 347–369.Google Scholar
  17. Gale, J., Binmore, K., and Samuelson, L. (1995). “Learning to be Imperfect: The Ultimatum Game.” Games and Economic Behavior 8, 56–90.Google Scholar
  18. Guth, W., Schmittberger, R., and Schwarz, B. (1982). “An Experimental Analysis of Ultimatum Bargaining.” Journal of Economic Behavior and Organization. 3, 367–388.Google Scholar
  19. Harrison, G. and McCabe, K. (1996). “Expectations and Fairness in a Simple Bargaining Experiment.” International Journal of Game Theory. 25, 303–327.Google Scholar
  20. List, J. and Cherry, T. (2000). “Learning to Accept in Ultimatum Games: Evidence from an Experimental Design the Generates Low Offers.” Experimental Economics. 3, 11–30.Google Scholar
  21. Mookherjee, D. and Sopher, B. (1994). “Learning Behavior in an Experimental Matching Pennies Games.” Games and Economic Behavior. 7, 62–91.Google Scholar
  22. Mookherji, D. and Sopher, B. (1997). “Learning and Decision Costs in Experimental Constant Sum Games.” Games and Economic Behavior. 19(1), 97–132.Google Scholar
  23. Moulton, B. (1986). “Random Group Effects and the Prevision of Regression Estimates.” Journal of Econometrics. 32, 385–397.Google Scholar
  24. Nagel, R. and Tang, F.F. (1998). “Experimental Results on the Centipede Game in Normal Form: An Investigation on Learning.” Journal of Mathematical Psychology. 42, 356–384.Google Scholar
  25. Ochs, J. and Roth, A.E. (1989). “An Experimental Study of Sequential Bargaining.” American Economic Review. 79, 355–384.Google Scholar
  26. Rabin, M. (1993). “Incorporating Fairness into Game Theory and Economics.” American Economic Review. 83, 1281–1302.Google Scholar
  27. Rapoport, A., Erev, I., Abraham, E.V., and Olson, D.E. (1997). “Randomization and Adaptive Learning in a Simplified Poker Game.” Organizational Behavior and Human Decision Processes. 69, 31–49.Google Scholar
  28. Rapoport, A., Seale, D., Erev, I., and Sundali, J.A. (1998). “Coordination Success in Market Entry Games: Tests of Equilibrium and Adaptive Learning Models.” Management Science. 44, 119–141.Google Scholar
  29. Roth, A.E. (1995). “Bargaining Experiments.” Handbook of Experimental Economics, J. Kagel and A.E. Roth (eds.). Princeton University Press, pp. 253–348.Google Scholar
  30. Roth, A.E. and Erev, I. (1995). “Learning in Extensive-Form Games: Experimental Data and Simple Dynamic Models in the Intermediate Term.” Games and Economic Behavior, Special Issue: Nobel Symposium. 8, 164–212.Google Scholar
  31. Roth, A.E., Prasnikar, V., Okuno-Fujiwara, M., and Zamir, S. (1991). “Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study.” American Economic Review. 81, 1068–1095.Google Scholar
  32. Samuelson, L. (2001). “Introduction to the Evolution of Preferences.” Journal of Economic Theory. 97, 225–230.Google Scholar
  33. Sarin, R. and Vahid, F. (2001). “Predicting How People Play Games: A Simple Dynamic Model of Choice.” Games and Economic Behavior. 34, 104–122.Google Scholar
  34. Slonim, R. and Roth, A.E. (1998). “Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic.” Econometrica. 66(3), 569–596.Google Scholar
  35. Tang, F.-F. (1995). “Anticipatory Learning in Two-Person Games: An Experimental Study.” Dissertation, University of Bonn.Google Scholar
  36. Thorndike, E.L. (1898). Animal Intelligence: An Experimental Study of the Associative Processes in Animals. Psychological Monographs, 2.Google Scholar
  37. Van Huyck, J.B., Cook, J.P., and Battalio, R.C. (1994). “Selection Dynamics, Asymptotic Stability, and Adaptive Behavior.” Journal of Political Economy. 102, 975–1005.Google Scholar

Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • David J. Cooper
    • 1
  • Nick Feltovich
    • 2
  • Alvin E. Roth
    • 3
  • Rami Zwick
    • 4
  1. 1.Case Western Reserve UniversityUSA
  2. 2.University of HoustonUSA
  3. 3.Harvard UniversityUSA
  4. 4.Hong Kong University of Science and TechnologyHong Kong

Personalised recommendations