Expressing Emotion and Fairness Crowding-Out in an Ultimatum Game with Incomplete Information

55 Pages Posted: 15 Mar 2014

See all articles by Josie Chen

Josie Chen

Brown University - Department of Economics

Kenju Kamei

Durham University - Department of Economics and Finance

Date Written: March 13, 2014

Abstract

Recent experimental research has shown that when rating systems are available, buyers are more generous in accepting unfair offers made by sellers. It has also shown that sellers make fairer decisions when they are rated, while some studies show that they are little affected by the rating systems. These studies are conducted under complete information settings. However, asymmetric information about the values of traded commodities between sellers and buyers may change their perception of fairness and thus may change sellers’ decisions. We conduct ultimatum game experiments in which only the sellers are informed of the size of pies. We find that when rating systems are available to the buyers, the buyers become more amenable to potentially unfair offers. We also find that sellers attempt to sell the commodity at higher prices, taking advantage of the buyers’ openness to potentially unfair offers, contrary to the past studies with complete information.

Keywords: Experiments, Ultimatum Game, Incomplete Information, Emotion, Rating, Social Approval, Social Disapproval

JEL Classification: C91, D03, D82, M21

Suggested Citation

Chen, Josie and Kamei, Kenju, Expressing Emotion and Fairness Crowding-Out in an Ultimatum Game with Incomplete Information (March 13, 2014). Available at SSRN: https://ssrn.com/abstract=2408496 or http://dx.doi.org/10.2139/ssrn.2408496

Josie Chen

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Kenju Kamei (Contact Author)

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

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