The Ultimatum Game: Interdependent Preferences in Experimental Setting

We approach the Ultimatum Game as a mechanism designed to elicit information about the preferences and beliefs of players. While remaining agnostic about the right way to interpret preferences, we maintain the assumption that preferences are interdependent the utility of a player may be a function of other players’ types. We explain the relation between the best known explanations of the experimental evidence to the proposed framework. We then illustrate how standard arguments can be used to extract the information conveyed by existing experimental results, and how the latter can restrict the set of plausible models of interdependence. We then conduct an experiment that tests the equilibrium predictions of the proposed model as well as models of social preferences and intention based reciprocity. We find that the experimental evidence is consistent with the equilibrium prediction of the model with interdependent preferences, while being inconsistent with the other models. 0.