Unequal Outside Options in the Lost Wallet Game
University of Canterbury Working Paper
14 Pages Posted: 14 Apr 2008 Last revised: 19 Oct 2009
Date Written: October 14, 2009
Experimental evidence suggests the size of the foregone outside option of the first mover does not affect the behavior of the second mover in the lost wallet game. In this paper we experimentally compare the behavior of subjects when they face an outside option with unequal payoffs, i.e., the first mover gets 10 and the second mover gets 0, and when they face an outside option with equal payoffs, i.e., both get 5. Consistent with the most of the literature we do not find a significant difference in behavior of second movers.
Keywords: Experimental economics, fairness, inequality, lost wallet game, outside option
JEL Classification: C72, C78, C91
Suggested Citation: Suggested Citation