Rejection of Hyper-Fair Offers Due to Inequality Aversion and Social Debt

Pricing Strategy in a Competitive Agricultural Market

In a one-time, anonymous interaction, Player A is given $100 and must propose a split with Player B. Player B can either accept the split, in which case they both get the proposed amounts, or reject it, in which case both players get $0. A model assuming players are purely self-interested predicts Player A will offer the smallest possible amount (e.g., $1) and Player B will accept it. However, experiments consistently show different results. Which of the following findings best explains the discrepancy between the prediction and the observed reality?

Analyzing Decision-Making in a Bargaining Experiment

Evaluating the Predictive Power of the Self-Interest Model

In a one-shot ultimatum game, a theoretical model assuming purely self-interested actors makes different predictions than what is typically observed in real-world experiments. Match each player's role and context (theoretical vs. observed) with the corresponding decision-making behavior.

The frequent rejection of offers below 20% of the total sum in one-shot, anonymous bargaining experiments provides strong evidence for the economic model that assumes individuals are purely self-interested and seek to maximize their own material payoff.

Interpreting Experimental Bargaining Results

In numerous one-shot, anonymous bargaining experiments, a significant number of participants who are offered a small portion of a total sum (e.g., 20% or less) choose to reject the offer, resulting in both participants receiving nothing. What is the most significant implication of this consistent experimental finding for economic theory?

Interpreting Experimental Bargaining Data

In a one-shot, anonymous bargaining experiment, a Proposer is given $20 to split. The Proposer offers $2 to the Responder. The Responder rejects the offer, resulting in both players receiving $0. Which fundamental assumption of a purely self-interested economic model is most directly contradicted by the Responder's action?

Analyzing Decision-Making in a Bargaining Experiment