This work is concerned with human irrationality, more specifically with the situation of ultimatum game within game theory.
Experimental economics reports evidence of human irrationality, debates on which are of high relevance nowadays. Results of many experiments, particularly games, differ from those expected by neoclassical theory. Human behavior often goes beyond rational choice, prioritizing feelings and beliefs.
Researchers define many factors that influence outcomes of such choice. Present paper by dint of literature review focuses on the ultimatum game in order to understand what factors influence players while making decisions and how they affect outcomes.
Moreover, the paper aims to gather different findings together in order to have a full picture of factors discovered to date. Thus, feeling of justice and fairness, cultural background, time, gender, attractiveness and even mood affect the outcomes of ultimatum game are addressed.
Table of Contents
1. Introduction
2. Literature review
2.1 Origin and rules of Ultimatum Game
2.2 Fairness
2.3 Cultural difference
2.4 Time effect
2.5 Gender and attractiveness
2.6 Mood
3. Discussion
4. Conclusion
Objectives and Key Themes
This paper aims to explore the irrational nature of human decision-making within the context of the Ultimatum Game, synthesizing various factors discovered through experimental economics research to provide a comprehensive understanding of what influences players' choices.
- The influence of fairness perceptions and social motives on decision-making.
- The impact of cultural diversity and market integration on game outcomes.
- The role of temporal delays in fostering rational responses.
- The effects of personal characteristics, including gender, physical appearance, and mood, on bargaining behavior.
Excerpt from the Book
2.2 Fairness
On focus of experiments with ultimatum game is a question of fairness. Interpersonal conflict between self-interest and feeling of justice, constructing social decisions, had been discussed since ever. Nevertheless, the researches still find new evidence and explanations to this phenomena. Fairness was discovered as an influencing motive yet in the first ultimatum game (Güth et al., 1982). The term comprises such interconnected preferences like altruism, reciprocity, revenge etc. (Dickinson, 2002, p. 138). Concern with fairness is discussed to be a universal human characteristic, which proves evolutionary evidence of importance of this feeling for human adaptation (Bolton et. al., 1998; Camerer & Thaler, 1995; Forgas et al., 2008, as cited in Forgas & Tan, 2013).
Some researches based possible explanation on theory of social comparison (Bolton, 1991); others developed this idea by adding consideration of intentions of an opponent player bringing “positive altruism (helping friends through mechanisms like gift exchange and trust) and negative envy (punishing enemies at a cost to oneself)” (Rabin, 1993 as cited in Camerer & Thaler, 1995, p.215). Models of learning and evolution, unlikely above-described, suggest that players do not have concerns about other’s gain, they simple do not care, but they learn from each other’s actions. Thus, proposers start to make higher stakes as they receive rejections of low ones. Responders in their turn learn to accept low offers, although slow (Binmore and Samuelson, 1993 as cites in Camerer & Thaler, 1995, p. 215). Of course, these theories presume more complicated experimental settings; learning in one-shot games is not possible.
Summary of Chapters
1. Introduction: Outlines the persistence of the Ultimatum Game in economic experiments and sets the objective of identifying factors that drive human decision-making beyond rational choice models.
2. Literature review: Provides a detailed examination of the game's origins and current scientific findings regarding factors like fairness, culture, time, gender, appearance, and mood.
2.1 Origin and rules of Ultimatum Game: Explains the basic structure of the game and the transition from the concept of homo economicus to homo reciprocator.
2.2 Fairness: Analyzes how the human need for justice and fairness competes with self-interest, impacting the acceptance and rejection of monetary offers.
2.3 Cultural difference: Discusses how social norms, market integration, and cultural background influence cooperation and fairness thresholds in different societies.
2.4 Time effect: Investigates the impact of cognitive delay on emotional processing, demonstrating that having time to think promotes more rational decision-making.
2.5 Gender and attractiveness: Reviews studies on how physical appearance and gender affect negotiation dynamics and the "beauty premium."
2.6 Mood: Examines how positive and negative affective states shift decision strategies and influence the likelihood of rejecting unfair offers.
3. Discussion: Critically evaluates the limitations of laboratory experiments, such as external validity and stake size, and suggests future research directions.
4. Conclusion: Summarizes the usefulness of the Ultimatum Game for understanding economic imperfection and provides practical insights for real-world negotiations.
Keywords
experimental economics, ultimatum game, irrational factors, fairness, social preferences, decision-making, homo reciprocator, cultural difference, time effect, gender, physical attractiveness, mood, bargaining, neuroeconomics, behavioral economics.
Frequently Asked Questions
What is the core focus of this research paper?
The paper explores the Ultimatum Game to understand why human behavior in economic experiments frequently deviates from the neoclassical predictions of rational self-interest.
Which academic fields are connected to this study?
The work primarily bridges experimental economics, behavioral economics, psychology, and management studies.
What is the primary objective or research question?
The main goal is to identify and synthesize the various irrational factors—such as fairness, culture, and mood—that influence players' decisions and the final outcomes of the Ultimatum Game.
Which scientific methodology is utilized in this paper?
The paper employs a comprehensive literature review, synthesizing findings from numerous prior experiments to create a clear picture of the diverse factors affecting decision-making.
What topics are covered in the main body of the paper?
The main body examines the game's rules, the role of fairness, the influence of cultural diversity, the impact of time constraints, the effects of physical appearance and gender, and the significant role of player mood.
Which keywords best characterize this research?
Key terms include experimental economics, ultimatum game, irrational factors, social preferences, fairness, and behavioral decision-making.
How does the author define the "homo reciprocator"?
It is defined as a player who is neither purely altruistic nor purely selfish, but one who includes features like cooperation and the willingness to punish non-cooperative behavior even at a personal cost.
How does the delay of 10 minutes affect the game's results?
Research cited in the paper indicates that a 10-minute delay helps players manage their emotions, which leads to a significant increase in acceptance rates for low offers.
What is the "beauty premium" in the context of the Ultimatum Game?
It refers to the observation that attractive people are often offered more money in experiments, although they are also subject to higher demands from the proposers.
Does the amount of money at stake significantly alter player behavior?
The paper notes that while some scientists worry that low stakes limit the validity of laboratory experiments, other studies suggest that the amount at stake has less influence on behavior than more subtle contextual manipulations.
- Quote paper
- Ekaterina Valeeva (Author), 2016, Exploring Ultimatum Game. On the Irrational Nature of Human Decision-Making, Munich, GRIN Verlag, https://www.grin.com/document/463247
