Outside Options and Social Comparison in 3-Player Ultimatum Game Experiments

Abstract

We conducted ultimatum games in which a proposer offers a division of $10 to a respondent, who accepts or rejects it. If an offer is rejected, players receive a known outside option. Our proposers made simultaneous offers to two respondents, with outside options of $2 and $4. The rate of rejected offers was higher than in similar studies, around 50%, and persisted across five trials. Outside options seem to make players "egocentrically" apply different interpretations of the amount being divided, which creates persistent disagreement. And half of respondents demand more when they know other respondents are being offered more.

Additional Information

We thank participants in the Social Organization of Competition Workshop (U Chicago) and the Behavioral Decision Research in Management conference (Boston, May 1994), and the referees and special issue editor Tom Palfrey, for extremely helpful comments. Published as Knez, Marc J., and Colin F. Camerer. "Outside options and social comparison in three-player ultimatum game experiments." Games and Economic Behavior 10, no. 1 (1995): 65-94.

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