Tuesday, April 06, 2010

How not to get rejected: evidence on the Ultimatum Game & some advice from Dr Kev

The Ultimatum Game is widely used in experimental economics. One of the peculiar findings is the high rate of rejection. A good homo economicus would never reject. The paper below reports the interesting finding that people are more likely not to reject the offer in this game if they delay the decision just by a few minutes.
One might conjecture that this has implications for other offers like asking someone out on a date. If you can contrive to have the decision delayed then maybe you are in with a better chance. What have you got to lose?

Let me sleep on it: Delay reduces rejection rates in Ultimatum Games
Grimm, Veronika, & Mengel, Friederike
We show that delaying acceptance decisions in the Ultimatum Game drastically increases acceptance rates of low offers. While in standard treatments without delay less than 20% of low offers are accepted, these numbers increase to around 65-75% as we delay the acceptance decisions by around 10 minutes. Our findings provide precise evidence for familiar notions such as ''sleeping on it'' and show that there may be a good reason why public administrations often communicate bad news on Friday afternoons. They shed new light on recent evidence in Neuroscience on brain activation after receiving bad news and raise questions about the extent to which decisions reveal the preferences of a decision-maker.


Peter Carney said...

Interesting stuff Dr. Kev.

are you familiar with Meat Loaf's classic musings and insight on this from the 70's?


in particular, see part 2

Liam Delaney said...

Meatloaf makes a few appearances in behavioural economics papers. His gift of making fairly random moments in time and situations seem incredibly urgent and time pressing and thus somehow convincing the girls in the song that some massive evil will occur if their love is not consummated immediately shows a fairly keen understanding of time discounting processes.

Kevin Denny said...

I need to investigate this further, very interesting. Meatloaf himself looks like a high discount rate kind of guy.