Abstract
Reciprocity is common in economic and social domains, and it has been widely documented in the laboratory. While positive and negative reciprocity are observed in investment and ultimatum games, respectively, prior laboratory studies often neglect the effect of time delays that are common in real-world interactions. This research investigates the effect of time delays on reciprocity in the investment and ultimatum games. We manipulate the time delay after second movers have been informed about the first movers’ decisions. We find that a delay is correlated with fewer rejections in the ultimatum game, but we find no effect of delays in the investment game. A follow-up study explores some of the processes that occur during time delay in the ultimatum game. We find delays correlated to increased reported feelings of satisfaction and decreased reported feelings of disappointment. Increased satisfaction is correlated to an increased probability of rejection, while disappointment has a more complex relationship to the probability of rejection.
Highlights
Over the last 20 years, many studies have found evidence of behaviors consistent with reciprocity – the act of responding to perceived kindness with kindness and perceived unkindness with retaliation (Fehr & Fischbacher, 2002; Cox, Friedman, & Gjerstad, 2007).Economists have studied its role in sustaining social norms, enforcing incomplete contracts, and producing downward wage rigidity (Fehr & Gächter, 2000)
We find no effect of a time delay on behavior in the investment game (IG)
In Experiment 1, we did not find that time delay affected rejection rates in the IG; in Experiment 2, we found that time delay may lead to less rejections in the ultimatum game (UG)
Summary
Over the last 20 years, many studies have found evidence of behaviors consistent with reciprocity – the act of responding to perceived kindness with kindness and perceived unkindness with retaliation (Fehr & Fischbacher, 2002; Cox, Friedman, & Gjerstad, 2007). Psychologists found that a waitress with a broad smile receives greater tips (Tidd & Lockard, 1978), while economists have found that kind acts are rewarded in the context of charitable donations (Falk, 2007) Both economists and psychologists have found negative reciprocity, for example, in the context of wage cuts (Greenberg, 1990; Kube, Marechal & Puppe, 2010). These models capture the idea of reciprocity and predict behavior consistent with observations in these experiments. Does time delay have any effect on second movers’ strategic behavior in the IG and UG? Do first movers anticipate potential effects of time delay and adapt their strategic behavior ?
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