| Abstract: |
We combine the choice data of proposers and responders in the ultimatum game,
their expectations elicited in the form of subjective probability questions,
and the choice data of proposers ("dictators") in a dictator game to estimate
a structural model of decision making under uncertainty. We use a large and
representative sample of subjects drawn from the Dutch population. Our results
indicate that there is considerable heterogeneity in preferences for equity in
the population. Changes in preferences have an important impact on decisions
of dictators in the dictator game and responders in the ultimatum game, but a
smaller impact on decisions of proposers in the ultimatum game, a result due
to proposer's subjective expectations about resopnders' decisions. The model
which uses subjective data on expectations has better predictive power and
lower noise level than a model which assumes that players have rational
expectations. |