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Equilibrium Play in Voluntary Ultimatum Games: Beneficence Cannot Be Extorted

19 Pages Posted: 29 Aug 2017  

Vernon L. Smith

Chapman University - Economic Science Institute; Chapman University School of Law

Bart J. Wilson

Chapman University - Smith Institute for Political Economy and Philosophy; Chapman University - Economic Science Institute (ESI); Chapman University, The Dale E. Fowler School of Law

Date Written: July 19, 2017

Abstract

One robust result in experimental economics is the failure to observe equilibrium play in the ultimatum game. A heretofore unnoticed feature of the game is that neither player voluntarily chooses to play the game. Motivated by Adam Smith’s proposition that beneficence — like that of nonequilibrium play in the ultimatum game — cannot be extorted by force, we offer the responder the opportunity to opt out of the game for a mere $1 payoff for both players. We observe high rates of equilibrium play with highly unequal splits when responders choose to play such ultimatum games with both fixed and variable sums.

Keywords: ultimatum games, voluntary play, Adam Smith, experimental economics

JEL Classification: C91

Suggested Citation

Smith, Vernon L. and Wilson, Bart J., Equilibrium Play in Voluntary Ultimatum Games: Beneficence Cannot Be Extorted (July 19, 2017). Available at SSRN: https://ssrn.com/abstract=3026357

Vernon L. Smith

Chapman University - Economic Science Institute ( email )

One University Dr.
Orange, CA 92866
United States
714-628-2830 (Phone)

Chapman University School of Law ( email )

One University Drive
Orange, CA 92866-1099
United States

Bart J. Wilson (Contact Author)

Chapman University - Smith Institute for Political Economy and Philosophy ( email )

One University Drive
Orange, CA 92866
United States
(714) 628-7306 (Phone)

HOME PAGE: http://www1.chapman.edu/~bjwilson/

Chapman University - Economic Science Institute (ESI) ( email )

One University Drive
Orange, CA 92866
United States
(714) 628-7306 (Phone)

Chapman University, The Dale E. Fowler School of Law ( email )

One University Drive
Orange, CA 92866-1099
United States
(714) 628-7306 (Phone)

HOME PAGE: http://www1.chapman.edu/~bjwilson/

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