Abstract
Compared to ultimatum games allowing for altruistic sanctioning via monitoring, Yes–No games only allow for unmonitored altruistic sanctioning. Game theoretically, the sequentially rational outcomes (for non-positive conflict payoffs of the responder) coincide, but the large multiplicity of equilibrium outcomes of ultimatum games is avoided by Yes–No games. As Avrahami et al. (J Socio-Econ 47: 47–54, 2013) for the ultimatum game, we experimentally implemented 100-period plays of Yes–No games for newly and randomly rematched player pairs to test whether their observation of fast and nearly universal convergence to equal sharing depends on its equilibrium property. Will there be significant altruistic sanctioning, convergence to solution play, or cyclicity in behavior? There are two possible pie sizes which either only proposers or both players know. The dynamics of play differ fundamentally from the quick convergence to equal sharing for ultimatum games. There is neither convergence to equal sharing nor to equilibrium play, but persistent heterogeneity in offers and (non)acceptance. Some participants engage in game theoretically unpredicted sanctioning even in later periods.
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Notes
Only a few randomly selected pairs were actually paid.
We refrain from a systematic comparison of YNGs with other game paradigms in experimental economics, (social and economic) psychology, and beyond. For a recent survey of the experimental literature of ultimatum and related games, see Güth and Kocher (2014).
The equilibrium dictates that the proposer offers 1 and the responder always accepts. This is consistent with the unique equilibrium in the Info treatment and the unique Bayesian equilibrium in the No Info treatment.
Note that we assume an awareness of YNG-rules. Without such an awareness initial repeated play would likely rely on the law of effect, specifically on reinforcement learning (see Erev and Roth 1998, for an application to repeated ultimatum play).
Whereas UG-rules risk to crowd out intrinsic work motivations (related to this, see Falk and Kosfeld 2006), which could be much stronger when employers rely on trust, the risk of YNG-rules is that they may trigger free-riding of opportunistic employees.
See Güth and Kocher (2014) for various sharing games and their experimental results
This endogenous multiplier is the decisive difference between the YNG and the trust game of Berg et al. (1995) with an exogenously constant multiplier.
Altruism may not be restricted to responder participants who can engage in altruistic sanctioning. It could also induce proposer participants to abstain more or less from greedy behavior whose future consequences could harm other proposer participants.
Random rematching did not rule out the possibility that participants meet again in the future periods as the size of a matching group was quite small as compared to the number of periods. This may contribute to the emergence of some kind of indirect reciprocity. The results reported in this paper may not generalize to perfectly stranger random rematching.
Only positive offers were possible in our experiment so that the YNG possesses a unique equilibrium. We also excluded negative offers because allowing for negative offers would render the YNG a social dilemma game, similar to YNGs with only positive offers in which the lowest positive offer is below the responder’s positive conflict payoff.
This independent elicitation of the proposer’s and the responder’s strategy is similar to that of Avrahami et al. (2013) who used the monotonic strategy method (responder participants had to state acceptance thresholds). Game theoretically, it does not matter for the YNG whether the responder choice is elicited before, simultaneously, or after the proposer’s allocation proposal as long as the responder cannot condition (non)acceptance on the proposal.
Our experiment was run without imposing a time limit per period; participants were allowed to submit their decisions at their own pace. Only during the first 10 periods did we observe very slow responses.
Of course, the effectiveness of such sanctioning relies on how proposers perceive rejection. Since responders cannot condition rejection on the offer, proposers may consider rejection just as bad luck, not as sanctioning.
See footnote 14.
We use the following R’s packages: lme4 package (version 1.1.21) to estimate random effect models and texreg package (version 1.36.23) by Leifeld (2013) to generate the tables for estimation results.
The fact that offering 4 is the median offer in case of \(\pi =24\) in the No Info treatment (see Table 1) also illustrates “hiding greed behind the small pie” by large-pie proposers in the No Info treatment, i.e., when they have moral wiggle room.
As long as the responder’s conflict payoff is not positive.
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We would like to thank Claudia Zellmann and Adrian Liebtrau for their excellent assistance in data collection and an anonymous referee for constructive comments and suggestions. Generous financial support from the Max Planck Society is gratefully acknowledged.
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Güth, W., Otsubo, H. Trust in generosity: an experiment of the repeated Yes–No game. Evolut Inst Econ Rev 18, 63–77 (2021). https://doi.org/10.1007/s40844-020-00170-5
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DOI: https://doi.org/10.1007/s40844-020-00170-5