Investment and Ultimatum Games: Experiments

Abstract

This paper examines the ultimatum game preceded by a single playerfs investment decision that is risky in that the business opportunity could fail to be discovered. The experimentfs results show that the functioning of social preference connecting the baseline ultimatum game with the investment crucially depends on the modelfs specifications, such as whether the proposer or the responder is the investor or the riskiness of the investment. The noninvestor/proposer tends to act in consideration of the efficiency of the investment, but not its riskiness. Such tendencies of the noninvestorfs/proposerfs social preferences are diametrically opposite to that of the investor/proposer.