An Experimental Analysis of Needs in Ultimatum Bargaining

Abstract

We tested the proposition that perceived need plays an important role in judgments about what is fair and thus what happens in ultimatum bargaining (Guth, Schmittberger, & Schwarze, 1982). In the ultimatum paradigm, there are 2 players, a proposer and a responder, and the issue is how to divide a fixed resource (here, a pool of 19 lottery tickets). The proposer makes one offer, and the responder accepts it or rejects it. If it is rejected, both players get 0. The rational model says proposers should offer 1, and responders should accept it; but data from many studies suggest otherwise, that people are concerned with fairness. In Experiment 1, participants were proposers, and we experimentally varied what the responder supposedly needed (just 1, or 9, or 18, or there was no mention of what the responder needed). The data are dramatic: The perceived need of the responder had a large impact. When the responder was seen as needing just 1, proposers generally offered 1. When the responder was seen as needing 18, the proposers generally offered 18. Equally dramatic results were obtained in Experiment 2, where participants were in the responder role and received a pathetic offer of 1 out of 19 lottery tickets. When they were led to think that the proposer needed 18, 77% of the participants accepted this pathetic offer of 1 lottery ticket. Thus, a need can be the reference point for assessing the fairness or unfairness of a situation and can impact behavior. These findings provide insight into how perceived need can influence justice judgments and the likelihood of agreement in negotiation. The data also suggest some practical advice: to have the best chance of having your offer accepted in negotiation, you should clearly articulate your needs.