Visual #6

Continuing Research in Ultimatum Game Behavior

Experimental Purpose

“These experiments create an empirical challenge to what we call the selfishness axiom— the assumption that individuals seek to maximize their own material gains in these interactions and expect others to do the same” (Henrich Economic Man 3).

Conclusions from early studies

“It is now well established that . . . people appear to be more fair-minded and cooperative than predictions based on homo-economicus would lead us to assume . . . “ (Ensminger).

Findings of recent studies in 15 small, indigenous societies around the world:

• In none of the 15 less-developed societies was people’s behavior in the ultimatum game consistent with the selfishness axiom.
• Individual differences are not important in explaining ultimatum game behavior.
  • Age, gender, socio-economic status, risk-aversion, size of the stake etc. did not affect ultimatum game behavior.
• Group differences in market integration and the importance of cooperation in economic activities explain a great deal of the group differences in ultimatum game behavior.
  • Splits are more equal (the initial offer was higher) in cultures where people must work cooperatively rather than autonomously to earn a living.
  • Splits were also more equal in cultures where people commonly exchange products and labor in markets.
• The way people played the ultimatum game reflects the way they interact in everyday life.

(Henrich, “’Economic Man’. . . ,” 5)

Ongoing Research – New Questions

• Does language affect the outcomes? (Does word choice in the instructions given to participants – “split,” “divide,” etc. – affect behavior?)

Explaining the Outcomes: Institutions Shape Behavior

“One important approach involves what are called ‘other-regarding’ preferences. Economists use the term ‘preferences’ to describe an individual’s likes and dislikes. The standard assumption about preferences is that people derive satisfaction only from their own lives and not from the lives of others. The ultimatum game results are inconsistent with these standard, materially self-interested preferences” (Burnham 243, emphasis added).

“Some have proposed that players have an innate conception of fairness, and that the 20% rejection rate is the result of the responder believing the proposer is acting unfairly. Vernon Smith and his colleagues believe, however, that more equal proposals may be due not to a taste for “fairness” (other-regarding preferences), but rather to a social concern for what others may think, and for being held in high regard by others. If this view is correct, other-regarding behavior can be interpreted as a form of social exchange…” (Hoffman, Preferences 371).

“. . . [A] market-oriented society may develop distinct cognitive capacities and habits. . . . [E]xtensive market interactions may accustom individuals to the idea that interactions with strangers may be mutually beneficial. By contrast, those who do not customarily deal with strangers in mutually advantageous ways may be more likely to treat anonymous interactions as hostile, threatening, or occasions for opportunistic pursuit of self-interest” (Henrich, Economic Man 38).

“. . . [T]he general finding from the overall cross-cultural project…shows fairness increasing with market integration. Something appears to trigger fair-mindedness in association with exposure to market institutions. I [theorize]. . . that among those selling either their labor or their goods, there may be a higher premium placed on reputation, and that one way of signaling a good reputation is to behave fair-mindedly. Eventually, this norm appears to be internalized, as is evident from its emergence in the anonymous, one-shot, economic experiments” (Ensminger 33, emphasis added).