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.