Decisions and perceptions of recipients in ultimatum bargaining games

Abstract In simple ultimatum bargaining games a bargainer chooses either to accept or to reject an offer. If he or she accepts the offer, payoffs to both parties are established by the offer; if he or she rejects it each receives nothing. The strategic solution to such games is for the person receiving the offer to accept anything greater than zero while the person making the offer demands virtually all the prize for himself or herself. Research has shown that offers are much closer to equality than the strategic solution suggests, and that strategic offers often are rejected. Three explanations have been offered: (1) The subjects are motivated by internalized fairness norms. (2) The subjects do not understand the situation. (3) The subjects are afraid strategic offers will be rejected. Three experiments reported in the present article offer support for the third explanation.

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