Ultimatum bargaining: Ultimatum bargaining: From synapse to societyFrom synapse to society

Colin F. Camerer, CaltechColin F. Camerer, Caltech Ultimatum game:Ultimatum game:

– Proposer offers division of $10; responder accepts or rejectsProposer offers division of $10; responder accepts or rejects Theories: Theories:

– Rejections express social preferences (care about $, envy, guilt)Rejections express social preferences (care about $, envy, guilt)– ““Unnatural habitat” (adapted to repeated games, one-shot is Stroop)Unnatural habitat” (adapted to repeated games, one-shot is Stroop)

Variants: Variants: – Dictator games (same responsibility?)Dictator games (same responsibility?)– Demographics (generally weak)Demographics (generally weak)– Stakes– rejected $ goes up, % goes downStakes– rejected $ goes up, % goes down– Repetition etc.– weak Repetition etc.– weak – Low information about “pie” sizeLow information about “pie” size lower offers (and “pleading poverty ”) lower offers (and “pleading poverty ”)– Proposer competitionProposer competition offers give most to responder offers give most to responder– Two-stage gamesTwo-stage games responders (weakly) accept lower offers because responders (weakly) accept lower offers because

proposers have an “excuse” (intentions matter) proposers have an “excuse” (intentions matter)

Game-ending ultimatum rejections are like Game-ending ultimatum rejections are like “disadvantageous counterproposals” in longer “disadvantageous counterproposals” in longer

gamesgames

US data (Roth et al 1991)US data (Roth et al 1991)

Ultimatum vs dictator “games” (Forsythe et al 1994) Ultimatum vs dictator “games” (Forsythe et al 1994) NB: Dictator games are “weak situations”, more varianceNB: Dictator games are “weak situations”, more variance

Low, medium, high stakes (Slonim-Roth 1998)Low, medium, high stakes (Slonim-Roth 1998)

Do players learn to accept low offers at high stakes?Do players learn to accept low offers at high stakes?

Special subject pools & conditionsSpecial subject pools & conditions

Neural evidence (ACC, DLPFC, insula for low offers; Neural evidence (ACC, DLPFC, insula for low offers; difference predicts rejection r=.4)difference predicts rejection r=.4)

Autistics offer less (don’t expect rejection)Autistics offer less (don’t expect rejection)– Adults learn to take “objective stance”Adults learn to take “objective stance”

Cutting-off-nose effect (Monkeys reject unequal pay, Cutting-off-nose effect (Monkeys reject unequal pay, Brosnan and De Waal, Science 9/18/03; F Brosnan and De Waal, Science 9/18/03; F capuchins will refuse exchange for low payoff if capuchins will refuse exchange for low payoff if others get high payoff)others get high payoff)

Small-scale societiesSmall-scale societies– Variation in mean offer (some offer very little)Variation in mean offer (some offer very little)– Fair offers correlated with “market integration” and Fair offers correlated with “market integration” and

“cooperativeness” “cooperativeness”

““Market” games (9-proposer Market” games (9-proposer competition)competition)

Intentions matter (Falk et al 99) (cf. Intentions matter (Falk et al 99) (cf. law e.g. manslaughter vs murder)law e.g. manslaughter vs murder)

Table8: Ultimatumgameswith varying unchosen paths, Falk et al (1999)

unchosen interpretation of how often the(8,2) o®er is...o®er (8,2) o®er ...rejected ...proposed

(5,5) relatively unfair .44 .31(2,8) not sacri¯cial .27 .73(8,2) neutral .18 |

(10,0) relatively fair .09 1.00

Sanfey et al fMRI study (Sci 13 Sanfey et al fMRI study (Sci 13 March ’03)March ’03)

““ask the brain”: within (L) and pooled (R) correlations ask the brain”: within (L) and pooled (R) correlations

of insula and DLPFC activity & rejectionof insula and DLPFC activity & rejection

Feeling: This is your brain on unfairnessFeeling: This is your brain on unfairness

Pain circuitryPain circuitry

Ultimatum offer experimental sitesUltimatum offer experimental sites

slash & burngathered foods

fishinghunting

The Machiguengaindependent families

cash cropping

African pastoralists (Kenya)

Whale Huntersof

Lamalera, Indonesia

High levels ofcooperation

among hunters of whales, sharks,

dolphins and rays. Protein for carbs

trade with inlanders

Researcher: Mike Alvard

Ultimatum offers across societies Ultimatum offers across societies (mean shaded, mode is largest circle…)(mean shaded, mode is largest circle…)

Fair offers correlate with market integration (top), Fair offers correlate with market integration (top), cooperativeness in everyday life (bottom)cooperativeness in everyday life (bottom)

Ultimatum offers of children who Ultimatum offers of children who failed/passed false belief testfailed/passed false belief test

Autistics v normalsAutistics v normals (adults top, children bottom) (adults top, children bottom)

Israeli subject (autistic?) complaining post-Israeli subject (autistic?) complaining post-experiment (Zamir, 2000)experiment (Zamir, 2000)

Unnatural habit hypothesis…Unnatural habit hypothesis…

"Although subjects fully understand the rules of the "Although subjects fully understand the rules of the game and its payoff structure, their behavior is game and its payoff structure, their behavior is influenced by an influenced by an unconsciousunconscious perception that the perception that the situation they are facing is part of a much more situation they are facing is part of a much more extended game of similar real-life interactions…extended game of similar real-life interactions…We believe that it is practically impossible to We believe that it is practically impossible to create laboratory conditions that would cancel out create laboratory conditions that would cancel out this effect and induce subjects to act as if they this effect and induce subjects to act as if they were facing an anonymous one-shot [ultimatum were facing an anonymous one-shot [ultimatum game]." (Winter & Zamir, 1997)game]." (Winter & Zamir, 1997)

Testing theories: New ideasTesting theories: New ideas

How to separate preference vs unnatural How to separate preference vs unnatural habitat views?habitat views?– Role of emotionsRole of emotions– Look for cross-game regularity in measured Look for cross-game regularity in measured

preferencespreferences– Learning (…or is it temporary satiation?)Learning (…or is it temporary satiation?)– fMRI and ACC Stroop interpretationsfMRI and ACC Stroop interpretations