Actions and Beliefs: Estimating Distribution-Based Preferences Using a Large Scale Experiment with Probability Questions on Expectations

C. Bellemare, S. Kroger, A.H.O. van Soest

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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 ("dictator") 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 proposer's in the ultimatum game, a result due to proposers subjective expectations about responders' 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.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages46
Volume2005-82
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper
Volume2005-82

Fingerprint

Ultimatum game
Experiment
Dictator game
Dictator
Equity
Subjective probability
Structural model
Predictive power
Rational expectations
Subjective data
Subjective expectations
Decision making under uncertainty

Keywords

  • ultimatum game
  • inquity aversion
  • subjective expectations

Cite this

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year = "2005",
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Actions and Beliefs : Estimating Distribution-Based Preferences Using a Large Scale Experiment with Probability Questions on Expectations. / Bellemare, C.; Kroger, S.; van Soest, A.H.O.

Tilburg : Econometrics, 2005. (CentER Discussion Paper; Vol. 2005-82).

Research output: Working paperDiscussion paperOther research output

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T1 - Actions and Beliefs

T2 - Estimating Distribution-Based Preferences Using a Large Scale Experiment with Probability Questions on Expectations

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AU - Kroger, S.

AU - van Soest, A.H.O.

N1 - Subsequently published in Econometrica, 2008 (rt) Pagination: 46

PY - 2005

Y1 - 2005

N2 - 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 ("dictator") 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 proposer's in the ultimatum game, a result due to proposers subjective expectations about responders' 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.

AB - 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 ("dictator") 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 proposer's in the ultimatum game, a result due to proposers subjective expectations about responders' 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.

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KW - inquity aversion

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