Ultimatum bargaining: From synapse to society Colin F. Camerer, Caltech  Ultimatum game: –Proposer offers division of $10; responder accepts or rejects  Theories: –Rejections express social preferences (care about $, envy, guilt) –“Unnatural habitat” (adapted to repeated games, one-shot is Stroop)  Variants: –Dictator games (same responsibility?) –Demographics (generally weak) –Stakes– rejected $ goes up, % goes down –Repetition etc.– weak –Low information about “pie” size  lower offers (and “pleading poverty ”) –Proposer competition  offers give most to responder –Two-stage games  responders (weakly) accept lower offers because proposers have an “excuse” (intentions matter)

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

US data (Roth et al 1991)

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

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

Do players learn to accept low offers at high stakes?

Special subject pools & conditions  Neural evidence (ACC, DLPFC, insula for low offers; difference predicts rejection r=.4)  Autistics offer less (don’t expect rejection) –Adults learn to take “objective stance”  Cutting-off-nose effect (Monkeys reject unequal pay, Brosnan and De Waal, Science 9/18/03; F capuchins will refuse exchange for low payoff if others get high payoff)  Small-scale societies –Variation in mean offer (some offer very little) –Fair offers correlated with “market integration” and “cooperativeness”

“Market” games (9-proposer competition)

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

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

“ask the brain”: within (L) and pooled (R) correlations of insula and DLPFC activity & rejection

Feeling: This is your brain on unfairness

Pain circuitry

Ultimatum offer experimental sites

slash & burn gathered foods fishing hunting The Machiguenga independent families cash cropping

African pastoralists (Kenya)

Whale Hunters of Lamalera, Indonesia High levels of cooperation among hunters of whales, sharks, dolphins and rays. Protein for carbs trade with inlanders Researcher: Mike Alvard

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

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

Ultimatum offers of children who failed/passed false belief test

Autistics v normals (adults top, children bottom)

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

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

Testing theories: New ideas  How to separate preference vs unnatural habitat views? –Role of emotions –Look for cross-game regularity in measured preferences –Learning (…or is it temporary satiation?) –fMRI and ACC Stroop interpretations