When asked to divide £400 among three people, male and relatively younger internet
users are more selfish than female and relatively older people who write old-fashioned
letters. That is the key result of a large-scale experiment with readers of the German
weekly newspaper Die Zeit. The results of the study by Professors Werner Güth,
Carsten Schmidt and Matthias Sutter are published in the March 2007 issue of the
Economic Journal.
The three researchers show that personal characteristics such as gender, age,
academic education and the medium of participation in the experiment (either by using
the internet or by sending hardcopy letters) make a significant difference to how
subjects divide a given amount of money between themselves and two other people.
A total of more than 5,000 readers participated in the experiment, thereby yielding
evidence on how social preferences and fairness are distributed in the general public.
By inviting newspaper readers, the authors have been able to address a much broader
and much representative sample of the general population than it is typically the case
when economic experiments are run with university students only.
By comparing actual student behaviour with the evidence from the 5,000-plus
newspaper readers, the authors have been able to show that students are on average
more selfish than the average reader (who is 46 years old).
In the experiment, readers were invited to participate in a ‘three-person ultimatum
game’, a simple bargaining experiment with the following structure:
• The first person makes a proposal on how to divide £400 among the three
players.
• The second person can either accept or reject the proposal. If they accept, the
proposal is implemented and each person gets the share that the first person
has proposed. If they reject the proposal, no one gets anything.
• The third person has no decision-making power, but solely depends on what the
first two people decide.
Game theory suggests that the second person will accept any positive amount,
irrespective of what the third person gets. This would, then, leave the lion’s share with
the first person. But this is not what the researchers observe. They find that:
• On average, people in the first person role allocate £170 for themselves, £133
for the second person and £97 for the third person. Such proposals are accepted
in more than 98% of cases. Hence, people in the first person role care for both
the second and third person, but treat themselves most favourably.
• Women in the role of the first person propose on average only £160 for
themselves, whereas men demand £180.
• Retired people’s proposals are closest to the equal split (£150 for themselves,
and £135 and £115 for the second and third person). People under 25 years,
however, distribute the pie by allocating £190, £130 and £80.
• Participants via the internet share as follows: £180, £130 and £90; and subjects
handing in their decisions via old-fashioned letters propose £160, £140 and
£100.
These results show that social preferences concerning the fair allocation of money are
rather heavily influenced by factors that have completely been ignored in economic
research so far. Hence, the findings of the authors not only provide a concise picture of
the taste for fairness in the general public, but also point in several directions that
economic research should pursue more extensively in the future.
ENDS
Notes for editors: ‘Bargaining Outside the Lab – A Newspaper Experiment of a Threeperson
Ultimatum Game’ by Werner Güth, Carsten Schmidt and Matthias Sutter is
published in the March 2007 issue of the Economic Journal.
Güth is at the Max Planck Institute of Economics in Jena. Schmidt is at the University of
Mannheim. Sutter is at the University of Innsbruck.
For further information: contact Matthias Sutter on +43-512-507-7170 (email:
matthias.sutter@uibk.ac.at; http://homepage.uibk.ac.at/~c40421); or RES Media
Consultant Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).