On the Role of the Hostage in Ultimatum Bargaining Games

Robert Shupp
Ball State University

Pamela Schmitt
United States Naval Academy

Kurtis Swope
United States Naval Academy
 
 

Abstract:

This paper examines behavior in a three-player ultimatum game. The payoff to the non-decision-making player (the "hostage") is separate from the bargaining pie and varies. We find that while responders may behave altruistically towards the hostage, they are more likely to reject a given offer if it leaves them with a more inequitable payoff relative to the hostage. Offers appear to be unaffected by the presence of a hostage. Though not a direct test of the Fehr and Schmidt (1999) and Bolton and Ockenfels (2000) models, our results are qualitatively consistent with their predictions.