A three-person ultimatum game to investigate effects of differences in need, sharing rules and observability on bargaining behaviour

Abstract

This paper describes an extension of the well-known simple two-person ultimatum game. The extended game includes differences between players in their need for the payoffs and it includes a third person who shares with the person who accepts an offer. In addition, this third person may receive information on the identity and decisions of the other players. The experimental procedure is designed to permit collection of multiple observations per participant while minimizing carry-over effects. From a first, exploratory experiment with this game it is concluded that equity considerations do play a role in this three-person bargaining situation, as players offered 20.3% more than in the typical two-person situation. It further appeared that a receiving person with a higher need allows exploitation by the offering person. Effects were also found for share, need and observability. It is concluded that the experimental procedure employed is a very efficient tool for the study of ultimatum bargaining behaviour.