22 Pages Posted: 10 Dec 2007
Date Written: May 2007
The perception of fairness of an offer in ultimatum type games may not only depend upon the distributional aspects of the offer itself but also on the intentions of the proposer that an offer may signal. Recovering intentions is subtle and may depend heavily upon the environment and consequently on the construction of the game. For example, one aspect of the environment could be the set of available alternative offers as studied in Falk et al. (2003). In this paper we report an experiment and provide evidence of a new aspect of an environment, which is related to the notion of temptation in a mini ultimatum type game that affects perception of fairness. Two games are put to test. In both games, a proposer has two available offers, fair and unfair, to choose from and the fair offer is kept identical across the games. However, in one game the unfair offer is significantly more skewed in favor of the proposer than the unfair offer in the other game. We show that the rejection rate of the more unfair offer is systematically less than the rejection rate of the less unfair offer across the two games.
Keywords: Ultimatum type games, fairness, temptation, intentions, reciprocity
JEL Classification: D63, C78, C91
Suggested Citation: Suggested Citation