Lecture 3. QIAO Zhilin ( 乔志林 ) School of Economics & Finance Xi an Jiaotong University

Transcription

1 Lecture 3 QIAO Zhilin ( 乔志林 ).co School of Economics & Finance Xi an Jiaotong University October, 2015

2 Introduction Ultimatum Game Traditional Economics Fairness is simply a rhetorical term Self-interest and ethical values with wide verbal allegiance are in conflict,... most the time, self-interest-theory t th... will win. (Stigler, 1981) November 13,

3 Introduction Ultimatum Game First study: Guth, Schmittberger & Schwarze (1982) Simple game: take-it-or-leave-it offer The equilibria are so simple to caculate Experiment Result Proposers offer an average of 40% of the money (many offer half) Responders reject small offers of 20% or so half the time Falsify the assumption that players maximize their payoffs November 13,

4 Introduction Ultimatum Game The U.S. Bill of Rights November 13,

5 Introduction Ultimatum Game in Reality November 13,

6 Introduction Dictator games are ultimatum games with the responder s ability to reject the offer removed. Altruism or fear of rejection? Trust games are dictator games with an initial investment and a trustee as a dictator. Moral hazard No contractual enforcement Investment measures trust Repayment measures trustworthiness November 13,

7 Introduction Social Preference The evidence of dictator allocation, ultimatum rejection, and dtrust trepayment tdoes not tfalsify game theory People Concern Others This can affect her utility Players have social preference and play gametheoretically November 13,

8 1.Ultimatum and Dictator Games: Basic Results Typical Ultimatum Game Proposer makes an offer Responder accepts or rejects Variants of Ultimatum Games Repeat the Game match with a new player each round MAO (Minimum Acceptable Offer) November 13,

9 1.Ultimatum and Dictator Games: Basic Results Regular Results of Ultimatum Games Mean Offers: 30%-40% Median Offers: 40%-50% 0, 0-10%, 51%-100% Offers: Rare 40%-50% Offers: Rarely Rejected Below 20% Offers: Half the Time (Sometimes) November 13,

10 1.Ultimatum and Dictator Games: Basic Results Emotions of Ultimatum Games Anger Motivates aggrieved part to administer justice Indignation A might feel when B does something unfair to C Third-party Punishment (Fehr, Fischbache, 2004) November 13,

11 1.Ultimatum and Dictator Games: Basic Results Dictator Games Proposers are fair-minded, or afraid of rejection, or both? First Dictator Game (Kahneman, Knetsch and Thaler, 1986) Results Mean offer: 20% (Forsythe, etal., 1994) Both strategic (to avoid rejection) and altruistic November 13,

12 1.Ultimatum and Dictator Games: Basic Results Varieties of Ultimatum and Dictator Games Methodological Stakes, Anonymity, Repetition Demographic Different People (Race, Age, Gender) Culture E.g. market integration Descriptive Not the Structure Structural Adding Moves November 13,

13 2. Methodological Variables Repetition General Results of Stranger-matching Repetition A Slight (usually insignificant) tendency for offers and rejections to fall over time Sbj Subjects may adjust offers more strongly when they know what other subjects have done or when playing with pure self-interest subjects (with programmed decisions) Experience has small effect unless play with pure self- interest players (computerized players) November 13,

14 2. Methodological Variables Repetition Question: the reason of drops in rejection Learning or temporary satiation of emotional expressions? November 13,

15 2. Methodological Variables Stakes Theories predict As stakes rise the amount that responders will reject goes up but the percentage they will reject goes down Results Very large changes in stakes (up to several months wages) )have only a modest effect on rejection Raising stakes has little effect on Prospers offers Aversion to costly rejection November 13,

16 2. Methodological Variables Anonymity Subjects derive utility from helping the experimenter Experimenter Blindness Results Anonymity sometimes lowers Dictator allocation Has little effect in Ultimatum November 13,

17 3. Demographical Variables Gender Mixed Effects Does not have a simple main effect on social preferences Seems to interact with many other variables (prices, beliefs about others) November 13,

18 3. Demographical Variables Race Account for wage and employment gap Results: interesting distinctions November 13,

19 3. Demographical Variables Major Economics Major Effect (Carter, Irons, 1991) Born, not made : Students who self-select to study economics tend to behave more self-interestedly, but do not change after four years of economics courses. Other studies have shown mixed effects November 13,

20 3. Demographical Variables Age How people at various ages are important for finding out whether fairness tastes are innate or learned through socialization Results: At very young age: pure self-interest At 3 grade: strict equality Adult: compromise Experience does not teach people to behave like standard game theory People may have adapted the ability to learn the ability to perceived unfairness over time School of Economics & Finance November 13,

21 3. Demographical Variables Beauty Beauty Premium in Wage (Hamermesh,etal.,1994) The top third of attractive men earn 4 percent more. Results (Schweizer, Solnick, 1999) Small tendency of beauty premium (10%) Men were not especially generous to attractive women Women offered about 5% more to attractive men than to unattractive men On average women offered $5.07 to attractive men (more than half!) November 13,

22 4. Culture Methodological Problems Stakes Language Experimenter Effects Confounds with Culture November 13,

23 4. Culture Results Countries have different sharing norms There are some societies in which the selfinterested game-theoretic prediction is accurate Hyperfair offers could be interpreted as insults Average offers are strongly correlated with the degree of market integration November 13,

24 5. Descriptive Variables: Labeling and Context Results: Changing the way games are described can have modest effects Seller-buyer exchange: can encourage self-interest Shared resource pool: can encourage generosity November 13,

25 6. Structure Variables Identity, Communication and Entitlement Identity Allowing Dictators to see their Recipient i (one-way) )decreased dthe number of leaving zero but did not change the mean significantly Communication One-way communication can rise the average allocation to half and 40% of Dictators give more than half Sympathy Allocation doubled when Recipient was a charity Entitlement Reduce Proposer allocation by half but rejection rate goes up November 13,

26 6. Structure Variables Competitive Pressure and Outside Options Competitive Pressure Two-stage Ultimatum Games Proposers used competitive pressure as an excuse (30% kept all the money compared with 13% in standard d game) Outside Options High disagreement rate Undermine Proposer s ability to guess what Responders will accept November 13,

27 6. Structure Variables Information About the Amount Being Divided Responders either know nothing about the amount or know the probability bilit distribution ib ti of the amount Responders do accept less Proposers do not hesitate to offer less when the amount is large Only Responders knew how much the Proposer was getting Rejected more when the payoffs were lower (Abbink et al, 2001) November 13,

28 6. Structure Variables Information About the Amount Being Divided Social Influence Ultimatum offers were affected by how much others offered (Knez, Camera, 1995) Subjects offered more when their opponents offered more before (Cason, Mui, 1998) Fairness norm evolves with experience November 13,