Bargaining by Children

Abstract

We study the development of bargaining behavior in children age seven through 18, using ultimatum and dictator games. We find that bargaining behavior changes substantially with age and that most of this change appears to be related to changes in preferences for fairness, rather than bargaining ability. Younger children make and accept smaller ultimatum proposals than do older children, Even young children are quite strategic in their behavior, making much smaller dictator than ultimatum proposals. Boys claim to be more aggressive bargainers than girls do, but they are not. Older girls make larger dictator proposals than older boys, but overall participants dictator proposals differ more by height than by sex. We argue that the existence of systematic differences in bargaining behavior across age and sex supports the argument that culture is a determinant of economic behavior, and suggests that people acquire this culture during childhood.

Keywords: children, bargaining, dictator game, ultimatum game

JEL Classification: C70, D10, D63