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Social EconomicsCurrent and Emerging Avenues$
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Joan Costa-Font and Mario Macis

Print publication date: 2017

Print ISBN-13: 9780262035651

Published to MIT Press Scholarship Online: September 2017

DOI: 10.7551/mitpress/9780262035651.001.0001

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Who Gains from Competition? The Ultimatum Game in a Labor-Market Setting in Ghana

Who Gains from Competition? The Ultimatum Game in a Labor-Market Setting in Ghana

Chapter:
(p.39) 3 Who Gains from Competition? The Ultimatum Game in a Labor-Market Setting in Ghana
Source:
Social Economics
Author(s):

Elwyn Davies

Marcel Fafchamps

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262035651.003.0003

Who benefits from introducing competition in the setting of an ultimatum game? We introduce a multiplayer version of the ultimatum game to subjects in Accra, Ghana, framed in a labour market setting. In this version three Proposers (employers) can make offers to three Responders (workers) at the same time. Subjects also participate in a treatment without competition. In this treatment one Proposer faces one Responder, just as in the classical ultimatum game. Even though in the competition treatment the number of Responders and Proposers is equal, we find some evidence that the amounts proposed increase in the treatment with competition. A potential explanation for this are bidding effects, where Proposers bid offensively for the Responders with lower reservation payoffs, to increase their chances of having this Responder accept their offer. This bidding increases the amounts that Proposers propose to give to the Responders. This is in particular beneficial to the Responders, who now capture a larger share of the surplus.

Keywords:   Ultimatum game, Ghana, Bidding effects, Proposers, responders

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