Hostname: page-component-f554764f5-8cg97 Total loading time: 0 Render date: 2025-04-22T19:34:57.985Z Has data issue: false hasContentIssue false
  • English
  • Français

Fairness has less impact when agents are less informed

Published online by Cambridge University Press:  14 March 2025

Jennie Huang ,
Judd B. Kessler Open the ORCID record for Judd B. Kessler [Opens in a new window]  and
Muriel Niederle
Jennie Huang*
Affiliation:
The Wharton School, University of Pennsylvania, Philadelphia, USA
Judd B. Kessler*
Affiliation:
The Wharton School, University of Pennsylvania, Philadelphia, USA
Muriel Niederle*
Affiliation:
Stanford University, Stanford, USA
*
[email protected]
[email protected]
[email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Research from the last four decades suggests that fairness plays an important role in economic transactions. However, the vast majority of this research investigates behavior in an environment where agents are fully informed. We develop a new experimental paradigm—nesting the widely used ultimatum game—and find that fairness has less impact on outcomes when agents are less informed. As we remove information, offers become less generous and unfair offers are more likely to be accepted.

Keywords

FairnessUltimatum gameInformationExperiment

JEL classification

C91: Laboratory, Individual Behavior D91: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Type
Original Paper
Information
Experimental Economics , Volume 27 , Issue 1: Special Issue in Honor of John H. Kagel , March 2024 , pp. 155 - 174
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2023

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

Footnotes

Funding for the study came from The Wharton School of the University of Pennsylvania, the Wharton Behavioral Lab, and Stanford University.

References

Andersen, S., Ertaç, S., Gneezy, U., Hoffman, M., & List, J. A. (2011). Stakes matter in ultimatum games. American Economic Review, 101, 3427–3439. 10.1257/aer.101.7.3427CrossRefGoogle Scholar
Andreoni, J., & Douglas Bernheim, B. (2009). Social image and the 50–50 norm: A theoretical and experimental analysis of audience effects. Econometrica, 77, 1607–1636 2561066 10.3982/ECTA7384Google Scholar
Bahry, D. L., & Wilson, R. K. (2006). Confusion or fairness in the field? Rejections in the ultimatum game under the strategy method. Journal of Economic Behavior & Organization, 60, 37–54. 10.1016/j.jebo.2004.07.005CrossRefGoogle Scholar
Bénabou, R., & Tirole, J. (2016). Mindful economics: The production, consumption, and value of beliefs. Journal of Economic Perspectives, 30, 141–64 10.1257/jep.30.3.141CrossRefGoogle Scholar
Bereby-Meyer, Y., & Niederle, M. (2005). Fairness in bargaining. Journal of Economic Behavior & Organization, 56, 173–186. 10.1016/j.jebo.2003.09.013CrossRefGoogle Scholar
Binmore, K., Shaked, A., & Sutton, J. (1985). Testing noncooperative bargaining theory: A preliminary study. American Economic Review, 75, 1178–80.Google Scholar
Bolton, G., & Ockenfels, A. (2000). Erc: A theory of equity, reciprocity, and competition. American Economic Review, 90, 166–193. 10.1257/aer.90.1.166CrossRefGoogle Scholar
Brañas-Garza, P., Cobo-Reyes, R., & Domínguez, A. (2006). “si él lo necesita”: Gypsy fairness in vallecas. Experimental Economics, 9, 253–264. 10.1007/s10683-006-9126-0CrossRefGoogle Scholar
Camerer, C., & Weigelt, K. (1988). Experimental tests of a sequential equilibrium reputation model. Econometrica, 56, 1–36 925975 10.2307/1911840CrossRefGoogle Scholar
Carpenter, J. (2010). Social preferences, Palgrave Macmillan 247–252.Google Scholar
Charness, G., & Rabin, M. (2002). Understanding social preferences with simple tests. The Quarterly Journal of Economics, 117, 817–869. 10.1162/003355302760193904CrossRefGoogle Scholar
Cochard, F., Le Gallo, J., Georgantzis, N., & Tisserand, J-C (2021). Social preferences across different populations: Meta-analyses on the ultimatum game and dictator game. Journal of Behavioral and Experimental Economics, 90. 10.1016/j.socec.2020.101613CrossRefGoogle Scholar
Croson, R. (1996). Information in ultimatum games: An experimental study. Journal of Economic Behavior & Organization, 30, 197–212. 10.1016/S0167-2681(96)00857-8CrossRefGoogle Scholar
Dana, J., Weber, R. A., & Kuang, J. X. (2007). Exploiting moral wiggle room: Experiments demonstrating an illusory preference for fairness. Economic Theory, 33, 67–80 2335841 10.1007/s00199-006-0153-zCrossRefGoogle Scholar
Danková, K., Morita, H., Servátka, M., & Zhang, L. (2022). Fairness concerns and job assignment to positions with different surplus. Southern Economic Journal, 88, 1490–1516. 10.1002/soej.12559CrossRefGoogle Scholar
Declerck, C. H., Kiyonari, T., & Boone, C. (2009). Why do responders reject unequal offers in the ultimatum game? An experimental study on the role of perceiving interdependence. Journal of Economic Psychology, 30, 335–343. 10.1016/j.joep.2009.03.002CrossRefGoogle Scholar
Dhami, S., Manifold, E., & Nowaihi, A. (2021). Identity and redistribution: Theory and evidence. Economica, 88, 499–531. 10.1111/ecca.12352CrossRefGoogle Scholar
Embrey, M., Fréchette, G. R., & Lehrer, S. F. (2014). Bargaining and reputation: An experiment on bargaining in the presence of behavioural types. The Review of Economic Studies, 82, 608–631 3335305 10.1093/restud/rdu029CrossRefGoogle Scholar
Fehr, E., & Schmidt, K. M. (1999). A theory of fairness, competition, and cooperation. The Quarterly Journal of Economics, 114, 817–868. 10.1162/003355399556151CrossRefGoogle Scholar
Griffin, J., Nickerson, D., & Wozniak, A. (2012). Racial differences in inequality aversion: Evidence from real world respondents in the ultimatum game. Journal of Economic Behavior & Organization, 84, 600–617. 10.1016/j.jebo.2012.09.010CrossRefGoogle Scholar
Güth, W., Pull, K., Stadler, M., & Zaby, A. (2019). Compulsory disclosure of private information: Theoretical and experimental results for the acquiring-a-company game. Journal of Institutional and Theoretical Economics (JITE), 175, 502–523. 10.1628/jite-2018-0013CrossRefGoogle Scholar
Güth, W., Pull, K., Stadler, M., & Zaby, A. K. (2017). Blindfolded vs. informed ultimatum bargaining—A theoretical and experimental analysis. German Economic Review, 18, 444–467. 10.1111/geer.12112CrossRefGoogle Scholar
Güth, W., Schmittberger, R., & Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. Journal of Economic Behavior & Organization, 3, 367–388. 10.1016/0167-2681(82)90011-7CrossRefGoogle Scholar
Güth, W., & van Damme, E. (1998). Information, strategic behavior, and fairness in ultimatum bargaining: An experimental study. Journal of Mathematical Psychology, 42, 227–247 9710549 10.1006/jmps.1998.1212CrossRefGoogle ScholarPubMed
Harstad, R., & Nagel, R. (2004). Ultimamtum games with incomplete information on the side of the prosper: An experimental study. Cuadernos de economía: Spanish Journal of Economics and Finance, 27, 37–74.Google Scholar
Ho, T-H, & Xuanming, S. (2009). Peer-induced fairness in games. American Economic Review, 99, 2022–49 10.1257/aer.99.5.2022CrossRefGoogle Scholar
Hoffman, E., & Spitzer, M. L. (1982). The coase theorem: Some experimental tests. Journal of Law and Economics, 25, 73–98. 10.1086/467008CrossRefGoogle Scholar
Jung, Y. J., Kagel, J. H., & Levin, D. (1994). On the existence of predatory pricing: An experimental study of reputation and entry deterrence in the chain-store game. The RAND Journal of Economics, 25, 72–93. 10.2307/2555854CrossRefGoogle Scholar
Kagel, J., Kim, C., & Moser, D. (1996). Fairness in ultimatum games with asymmetric information and asymmetric payoffs. Games and Economic Behavior, 13, 100–110 1385131 10.1006/game.1996.0026CrossRefGoogle Scholar
Kahneman, D., Knetsch, J., & Thaler, R. (1986). Fairness and the assumptions of economics. The Journal of Business, 59, 285–300. 10.1086/296367CrossRefGoogle Scholar
Keniston, D., Larsen, B.J., Li, S., Prescott, J.J., Silveira, B.S. & & Yu, C. (2021). Fairness in incomplete information bargaining: Theory and widespread evidence from the field.CrossRefGoogle Scholar
Klempt, C., Pull, K., & Stadler, M. (2019). Asymmetric information in simple bargaining games: An experimental study. German Economic Review, 20, 29–51. 10.1111/geer.12138CrossRefGoogle Scholar
Lee, C. C., & Lau, W. K. (2013). Information in repeated ultimatum game with unknown pie size. Economics Research International, 2013, 1–8 2013PhyIn...4....1L 10.1155/2013/470412CrossRefGoogle Scholar
Lee, K., & Shahriar, Q. (2017). Fairness, one’s source of income, and others’ decisions: An ultimatum game experiment. Managerial and Decision Economics, 38, 423–431. 10.1002/mde.2785CrossRefGoogle Scholar
Levitt, S. D., & List, J. A. (2007). What do laboratory experiments measuring social preferences reveal about the real world?. The Journal of Economic Perspectives, 21, 153–174. 10.1257/jep.21.2.153CrossRefGoogle Scholar
Liberman, V., Samuels, S. M., & Ross, L. (2004). The name of the game: Predictive power of reputations versus situational labels in determining prisoner’s dilemma game moves. Personality and Social Psychology Bulletin, 30, 1175–1185 15359020 10.1177/0146167204264004CrossRefGoogle ScholarPubMed
Mallucci, P., Diana Yan, W., & Cui, T. H. (2019). Social motives in bilateral bargaining games: How power changes perceptions of fairness. Journal of Economic Behavior & Organization, 166, 138–152. 10.1016/j.jebo.2019.08.022CrossRefGoogle Scholar
Mitzkewitz, M., & Nagel, R. (1993). Experimental results on ultimatum games with incomplete information. International Journal of Game Theory, 22, 171–98 1242004 10.1007/BF01243649CrossRefGoogle Scholar
Möbius, M. M., Niederle, M., Niehaus, P., & Rosenblat, T. S. (2022). Managing self-confidence: Theory and experimental evidence. Management Science, 68, 7793–7817.CrossRefGoogle Scholar
Neelin, J., Sonnenschein, H., & Spiegel, M. (1988). A further test of noncooperative bargaining theory: Comment. American Economic Review, 78, 824–836.Google Scholar
Ochs, J., & Roth, A. E. (1989). An experimental study of sequential bargaining. American Economic Review, 79, 355–384.Google Scholar
Ockenfels, A., & Werner, P. (2012). “hiding behind a small cake” in a newspaper dictator game. Journal of Economic Behavior & Organization, 82, 82–85. 10.1016/j.jebo.2011.12.008CrossRefGoogle Scholar
Poulsen, A. U., & Tan, J. H. W. (2007). Information acquisition in the ultimatum game: An experimental study. Experimental Economics, 10, 391–409. 10.1007/s10683-006-9143-zCrossRefGoogle Scholar
Prasnikar, V., & Roth, A. (1992). Considerations of fairness and strategy: Experimental data from sequential games. The Quarterly Journal of Economics, 107, 865–888. 10.2307/2118366CrossRefGoogle Scholar
Rabin, M. (1993). Incorporating Fairness into Game Theory and Economics. American Economic Review, 83, 1281–1302.Google Scholar
Rapoport, A., Sundali, J. A., & Seale, D. A. (1996). Ultimatums in two-person bargaining with one-sided uncertainty: Demand games. Journal of Economic Behavior & Organization, 30, 173–196. 10.1016/S0167-2681(96)00856-6CrossRefGoogle Scholar
Roth, A. E., Malouf, M. W. K., & Keith Murnighan, J. (1981). Sociological versus strategic factors in bargaining. Journal of Economic Behavior & Organization, 2, 153–177. 10.1016/0167-2681(81)90003-2CrossRefGoogle Scholar
Roth, A. E., & Keith Murnighan, J. (1982). The role of information in bargaining: An experimental study. Econometrica, 50, 1123–1142. 10.2307/1911866CrossRefGoogle Scholar
Samuelson, W., & Bazerman, M.H. (1984). The winner’s curse in bilateral negotiations.Google Scholar
Schmitt, P. (2004). On perceptions of fairness: The role of valuations, outside options, and information in ultimatum bargaining games. Experimental Economics, 7, 49–73. 10.1023/A:1026210021955CrossRefGoogle Scholar
Selten, R. (1978). The equity principle in economic behavior, Springer 289–301.Google Scholar
Siegel, S., & Fouraker, L. (1960). Bargaining and group decision making: Experiments in bilateral monopoly, McGraw-Hill.Google Scholar
Straub, P. G., & Murnighan, J. (1995). An experimental investigation of ultimatum games: information, fairness, expectations, and lowest acceptable offers. Journal of Economic Behavior & Organization, 27, 345–364. 10.1016/0167-2681(94)00072-MCrossRefGoogle Scholar
Stüber, R. (2020). The benefit of the doubt: Willful ignorance and altruistic punishment. Experimental Economics, 23, 848–872. 10.1007/s10683-019-09633-yCrossRefGoogle Scholar
Voslinsky, A., Lahav, Y., & Azar, O. H. (2021). Does a second offer that becomes irrelevant affect fairness perceptions and willingness to accept in the ultimatum game?. Judgment and Decision Making, 16, 743 10.1017/S1930297500007816CrossRefGoogle Scholar
Supplementary material: File

Huang et al. supplementary material

Huang et al. supplementary material
Download Huang et al. supplementary material(File)
File 6.4 MB