Source Study: Fischbacher, Fong, and Fehr (2009) on Fairness, Errors, and the Power of Competition
This 2009 study by Urs Fischbacher, Christina M. Fong, and Ernst Fehr, published in the 'Journal of Economic Behavior & Organization', investigates fairness, errors, and the impact of competition in economic games. Data from this research, specifically from its Figure 6, is used to illustrate rejection rates in ultimatum games with responder competition, as seen in Figure 4.20.
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Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
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Comparison of Proposer Offers: Kenyan Farmers vs. US Students
Comparison of Ultimatum Game Behavior: Rural Missourians vs. Kenyan Farmers
Source Study: Fischbacher, Fong, and Fehr (2009) on Fairness, Errors, and the Power of Competition
An economist conducts the same economic sharing experiment, known as the ultimatum game, in two different societies. In Society 1, the person proposing the split (the Proposer) consistently offers a large portion of the total sum (e.g., 40-50%). In Society 2, Proposers consistently offer a much smaller portion (e.g., 10-20%). Assuming the Proposers in both societies are primarily motivated by maximizing their own payoff, what is the most likely reason for this difference in behavior?
Interpreting Experimental Economic Data
Economists have conducted the ultimatum game with a wide variety of participant groups around the world, including students in industrialized nations, farmers in developing countries, and individuals from hunter-gatherer societies. A consistent finding is that the average offers from Proposers and the rejection rates from Responders can differ significantly between these groups. What is the primary implication of this observed behavioral variation?
Interpreting Cross-Cultural Economic Behavior
Analyzing Ultimatum Game Behavior in New Contexts
A researcher conducts an ultimatum game experiment exclusively with university students in a large European city. They find that Proposers offer, on average, 25% of the total sum, and Responders rarely reject offers above 10%. The researcher concludes that these findings reveal a universal human tendency to prioritize any personal gain over fairness. Based on what is known from applying this experiment across diverse populations, what is the most significant weakness in this conclusion?
Experimental results from applying the ultimatum game across diverse global populations consistently show that individuals in non-industrialized societies are more likely to accept any positive offer, aligning more closely with a model of pure economic self-interest than individuals in industrialized societies.
The application of a simple economic sharing game across a wide variety of human societies—from university students to hunter-gatherers—has revealed significant differences in how people propose and respond to offers. In some groups, low offers are common and accepted, while in others, low offers are frequently rejected, and Proposers tend to offer nearly half the sum. What is the most significant implication of these varied findings for the field of economics?
Value of Cross-Cultural Economic Experiments
Evaluating Competing Hypotheses in Economic Anthropology
Rationale for Cross-Cultural Ultimatum Game Studies
Interpreting Proposer Behavior in Economic Games
Researchers use the ultimatum game to study economic behavior in diverse populations. Match each participant group with the primary research rationale for studying them in this context.
The consistent finding from economic sharing experiments (ultimatum games) conducted across diverse global populations is that most people, regardless of cultural background, act as purely self-interested individuals, with proposers offering the minimum possible amount and responders accepting any non-zero offer.
An economic experiment involving two participants, a 'Proposer' and a 'Responder', is conducted in two different, isolated communities. In Community 1, Proposers consistently offer a nearly equal split of a sum of money, and Responders frequently turn down offers they perceive as low, resulting in neither participant receiving anything. In Community 2, Proposers tend to offer a small fraction of the sum, and Responders almost always accept any offer greater than zero. Based on a comparison of these outcomes, what is the most sound inference?
Evaluating the Significance of Experimental Economic Games
An economist studies a small, tight-knit community using an economic game where one person (the 'Proposer') suggests how to split a sum of money, and another person (the 'Responder') can accept or reject the offer. If the offer is rejected, neither person receives anything. The economist observes that Proposers consistently offer close to a 50/50 split, and Responders frequently reject any offer below 40%. The economist concludes: 'This community possesses an exceptionally strong, innate sense of fairness compared to other groups studied globally.' Which of the following statements presents the most significant challenge to the economist's conclusion?
Critiquing the 'Economic Man' Model
In an economic experiment, a 'Proposer' suggests how to split a sum of money with a 'Responder'. If the Responder accepts, they get the proposed split. If they reject, both get nothing. When this experiment was conducted with two different, isolated groups, the following patterns emerged:
- Group A: Proposers frequently offered 40-50% of the total sum. Responders in this group were very likely to reject any offer below 30%.
- Group B: Proposers most commonly offered 10-20% of the total sum. Responders in this group would typically accept any offer, even those as low as 10%.
An analyst reviews only the Proposer data and concludes: 'The Proposers in Group A are inherently more generous and have a stronger sense of fairness than the Proposers in Group B.'
Which of the following statements provides the strongest critique of the analyst's conclusion?
Critiquing an Experimental Design
Learn After
Figure 4.20: Rejection Rates in Ultimatum Games with and without Responder Competition
Average Offer Size With and Without Responder Competition
Analysis of Economic Decision-Making Under Competition
Consider two variations of a bargaining experiment where a Proposer offers to split a sum of money. In the first setup, there is a single Responder who can accept or reject the offer. In the second setup, two Responders compete; the first to accept the Proposer's offer gets the money. If a Proposer makes a low, unequal offer in both setups, how would the introduction of a competing Responder likely change the outcome?
The Effect of Competition on Bargaining Behavior
In a one-to-one 'take-it-or-leave-it' bargaining scenario, the person receiving the offer holds power because they can veto an unfair deal, forcing the proposer to make a more equitable offer to avoid getting nothing. The introduction of a second, competing recipient for the same offer fundamentally erodes this veto power.
Evaluating the Impact of Competition on Bargaining Power
In a bargaining game, a 'Proposer' offers a split of a sum of money to a 'Responder'. If the Responder accepts, the money is split as proposed; if they reject, neither party receives anything. Match each variation or principle of this game to its most likely corresponding description.
A 'Proposer' is deciding how to split a sum of money in a one-time interaction. In which of the following scenarios should the Proposer, acting to maximize their own share, logically make the lowest offer to the other party/parties?
Analyzing Responder Behavior Under Competition
An experiment is conducted where a 'Proposer' offers to split $10. The Proposer consistently offers $2 to the other participant(s), keeping $8. The experiment is run under two different conditions, and the results for the 'Responders' who receive the offer are recorded in the table below.
Condition Percentage of Responders Accepting the $2 Offer A: One Proposer, One Responder 58% B: One Proposer, Two Competing Responders 90% Based on this data, what is the most logical conclusion about the effect of competition among Responders?
In a bargaining scenario, a single 'Responder' is offered a small, unequal share of a prize by a 'Proposer.' The Responder might reject this offer out of a sense of fairness, even if it means neither party gets anything. Now, imagine the same low offer is made, but there are two Responders, and the first one to accept gets the share. What is the most accurate explanation for why a Responder in this competitive situation is far more likely to accept the low offer?