Rami Zwick

Dictator game giving: rules of fairness versus acts of kindness

Abstract. In both dictator and impunity games, one player, the dictator, divides a fixed amount of money between himself and one other, the recipient. Recent lab studies of these games have produced seemingly inconsistent results, reporting substantially divergent amounts of dictator giving. Also, one prominent explanation for some of these differences, the impact of experimenter observation, displayed weak explanatory power in a different but related lab game. Data from the new experiment reported here offers some explanations. We find that dictators determine how much they will give on the basis of the total money available for the entire experimental session, not on the basis of what is available per game. This explains the reported differences between impunity and dictator studies. When distributing a gift among several recipients, individual dictators show little tendency towards equal treatment. Also, we find no evidence for the experimenter observation effect. Comparison with earlier experiments suggests that differences in the context of the game, affected by differences in written directions and independent of experimenter observation, account for differences across dictator studies. We propose a hypothetical decision procedure, based on the notion that dictator giving originates with personal and social rules that effectively constrain self-interested behavior. The procedure provides a link between dictator behavior and a broader class of laboratory phenomena.

Measuring the vague meanings of probability terms.

Can the vague meanings of probability terms such as doubtful, probable, or likely be expressed as membership functions over the [0, 1] probability interval? A function for a given term would assign a membership value of /ero to probabilities not at all in the vague concept represented by the term, a membership value of one to probabilities definitely in the concept, and intermediate membership values to probabilities represented by the term to some degree. A modified pair-comparison procedure was used in two experiments to empirically establish and assess membership functions for several probability terms. Subjects performed two tasks in both experiments: They judged (a) to what degree one probability rather than another was better described by a given probability term, and (b) to what degree one term rather than another better described a specified probability. Probabilities were displayed as relative areas on spinners. Task a data were analyzed from the perspective of conjoint-measurement theory, and membership function values were obtained for each term according to various scaling models. The conjoint-measurement axioms were well satisfied and goodness-of-fit measures for the scaling procedures were high. Individual differences were large but stable. Furthermore, the derived membership function values satisfactorily predicted the judgments independently obtained in task b. The results support the claim that the scaled values represented the vague meanings of the terms to the individual subjects in the present experimental context. Methodological implications are discussed, as are substantive issues raised by the data regarding the vague meanings of probability terms.

Preferences and reasons for communicating probabilistic information in verbal or numerical terms.

Despite much disagreement regarding how probabilistic information is best communicated, virtually no research has been done to determine what communication modes people prefer or what factors affect their communication preferences. To address these issues, we did a survey of 442 graduate and undergraduate students in several specialties and universities. Some group differences emerged, but overall, 34% expressed preference for both conveying and receiving information about uncertainty in numerical rather than verbal form, 30% expressed the opposite preferences, and 35% indicated that they preferred to receive such information numerically but to convey it verbally. Generally, respondents who endorsed the use of verbal information said that it is easier to use, as well as more natural and personal. Those preferring numerical information said that it is more precise. Virtually all respondents, however, evidenced a willingness to use the opposite of their initially preferred mode if the situation should warrant it. The willingness to switch from one mode to another was said to depend on the level of precision implied by the data and the importance of the issue, as was suggested by Budescu and Wallsten (1987). These results may be helpful in structuring risk communication strategies.

Experimental Business Research

Preface R. Zwick, A. Rapoport. Part I: Coordination & Dynamic Decision Making. 1. An Experimental Study of Saving and Investing in a Complex Stochastic Environment V. Anderhub, et al. 2. Dynamic Decision Making in Marketing Channels: An Experimental Study of Cycle Time, Shared Information and Customer Demand Patterns S. Gupta, et al. 3. Cooperation in Single Play, Two-Person Extensive Form Games Between Anonymously Matched Players K. McCabe, et al. 4. Coordination in the Aggregate without Common Knowledge or Outcome Information A. Rapoport, et al. 5. Behavioral Accounting Experiments in Market and Game Settings W.S. Waller. 6. Behavioral Strategies in Repeated Pure Coordination Games R. Zwick, et al. Part II: Auctions. 7. Externalities and Alternative Auction Rules for Access to Rail Networks: Some Evidence from the Laboratory P.J. Brewer. 8. Equilibrium Bidding Strategies under the English and the Second-Price Auctions S.H. Chew, N. Nishimura. 9. Physiological Anticipation and Endowment Effects: Inferred Brain Function in the Formation of Allocations in an English Auction J. Dickhaut, et al. 10. Price Disclosure, Marginal Abatement Cost Information and Market Power in a Bilateral Ghg Emissions Trading Experiment Y. Hizen, T. Saijo. Part III: Learning and Construction. 11. EWA Learning in Bilateral Call Markets C.F. Camerer, et al. 12. On the Application and Interpretation of Learning Models E. Haruvy, I. Erev. 13. Preference Construction and Reconstruction F.R. Kardes, et al. Part IV: Bargaining and Contracts. 14. Trust, Reciprocity, and Other-Regarding Preferences: Groups vs. Individuals and Males vs. Females J.C. Cox. 15. Work Motivation, Institutions, and Performance S. Gachter, A. Falk. 16. Using Experimental Data to Model Bargaining Behavior in Ultimatum Games H. Lin, S. Sunder. Author Index. Subject Index. The Authors.

A Comparison of the Eigenvalue Method and The Geometric Mean Procedure for Ratio Scaling

This article evaluates and compares the performance of two ratio scaling methods, the eigenvalue method proposed by Saaty (1977, 1980) and the geometric mean procedure advocated by Williams and Crawford (1980), given random data. The two methods were ex amined in a series of monte carlo simulations for two response methods (direct estimation and constant sum) and various numbers of stimuli and response scales. The sampling distributions of the measures of consist ency of the two methods were tabulated, rules for de tecting and rejecting inconsistent respondents are out lined, and approximation formulas for other designs are derived. Overall, there was a high level of agree ment and correspondence between the results from the two scaling techniques even when the data were ran dom.

Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games

Learning models predict that the relative speed at which players in a game adjust their behavior has a critical influence on long term behavior. In an ultimatum game, the prediction is that proposers learn not to make small offers faster than responders learn not to reject them. We experimentally test whether relative speed of learning has the predicted effect, by manipulating the amount of experience accumulated by proposers and responders. The experiment allows the predicted learning by responders to be observed, for the first time.

Batch queues with choice of arrivals: Equilibrium analysis and experimental study

We study both theoretically and experimentally the decisions players make in two queueing games with batch service. In both games, players are asked to independently decide when to join a discrete-time queue to receive service, or they may simply choose not to join it at all. Equilibrium solutions in pure and mixed strategies are constructed for two games where balking is prohibited and where it is allowed. They are then tested experimentally in a study that varies the game type (balking vs. no balking) and information structure (private vs. public information) in a 2X2 between-subject design. With repeated iterations of the stage game, all four experimental conditions result in aggregate, but not individual, behavior approaching mixed-strategy equilibrium play.(This abstract was borrowed from another version of this item.)

Tacit Coordination in a Decentralized Market Entry Game with Fixed Capacity

We focus on a class of market entry games in which a newly emergent market opportunity may be fruitfully exploited by no more than a commonly known, exogenously determined number of firms. Our results show significant effects of the parameters manipulated in the study, namely, the market capacity, entry fee, and method of subject assignment to groups (fixed vs. random). In contrast to previous market entry games with linear payoff functions, we find no evidence of convergence to equilibrium play on the aggregate level. Shifting the focus of the analysis from the aggregate to the individual level, four clusters of subjects are identified. The patterns are: (1) choice of the same action that is independent of the parameters of the game or the outcome of previous presentations of the same game; (2) random choices with probabilities prescribed by the equilibrium solution for risk-neutral players; (3) random choices with probabilities equal to the individual observed overall proportion of entry; and (4) sequential dependencies that violate any model that assumes randomization. Subjects in the fourth and largest category are shown to adjust their choices in accordance with a simple principle of strategic reasoning. Copyright Kluwer Academic Publishers 2002

Toward the settlement of the fairness issues in ultimatum games: A bargaining approach

Abstract It has been suggested that modest demands by first movers in ultimatum games are motivated by fairness. Here we present a bargaining framework in which the main characteristic of the ultimatum game is embedded in an infinite horizon fixed-cost bargaining game where a quit move is a legitimate response. We show that the threat of quitting which in theory is empty, has nonetheless a significant attenuating effect on the demands of strong players. The fairness argument is therefore invalid since no moderation of demands is seen when the quit move is forbidden.

Two-person sequential bargaining behavior with exogenous breakdown

We examine bargaining behavior in a noncooperative game in which players alternate in making and responding to proposals over the division of a given surplus. Although the number of bargaining periods is unlimited and time is not discounted, the bargaining is subject to exogenous breakdown at each period with a fixed probability which is common knowledge. We manipulate three probabilities of break-down in a between-subjects design that allows comparison with previous studies of two-person bargaining with time discounting. Assuming that subjects maximize expected utility, and this utility is measured by monetary payoffs, our results reject both the subgame perfect equilibrium and equal split solutions. Data analyses reveal that a substantial percentage of subjects behave adaptively in that they systematically search for the highest acceptable demands.