An empirical study of determinants in decision-making process

Abstract

This paper presents a new social utility model, which highlights determinants in decision-making process when individuals are in strategic interactions by means of take-it-or-leave-it offer. In our model, the decision-maker seeks to maximize her utility function which depends both on her monetary payoff and payoffs differences between all individuals. We confront the predictions of our model with experimental regularities. We model decisions of player with a veto power by a dummy variable. In particular, we test the assumptions of the model with data obtained in a previous three-player dictator-ultimatum game experiment (Bonein, Serra, 2004). Regression and stepwise procedure allow us to confirm importance of personal payoff and existence of disadvantageous inequality aversion. However, our results dispute advantageous inequality aversion proposed by Fehr, Schmidt (1999). Moreover, advantageous inequality between others players becomes relevant. This last motivation was forgotten in inequality aversion models. This model decreases the importance of fairness motivation in rejection of positive offer. We show that motivation can be selfishness: the decision-maker seeks to maximize a particular utility function.