1. Overview

For your research assignment, you will collectively design, prepare, and execute an experiment involving variations of an ultimatum bargaining game. Responsibilities will be divided up, with the expectation that everyone will contribute to the project. When the experiment is completed, each of you will individually and independently analyze the results and write a formal paper based on the experiment.

Very briefly, here is the background. In a number of games that we will encounter this semester, subjects often depart from standard game-theoretic predictions in favor of fairer outcomes. For example, modal splits in ultimatum games are typically 50-50, and extreme offers are often rejected. This has led some economists to argue that rational choice models should be reformulated to include a taste for fairness. But what is this taste for fairness? Is it a preference over income distributions, or is it a preference for explicit reciprocity (returning kindness with kindness and unkindness with unkindness), or is it a combination of both? Does reciprocally fair behavior reflect distributional concerns, attribution of intentions, or both? Recent experiments attempt to tease apart these alternative interpretations of subjects’ behavior. One such experiment is Falk, Fehr, and Fischbacher (forthcoming, hereafter FFF), the results of which suggest that fairness reflects concerns about both distribution and intentions.

Your assignment is to address the nature of fair behavior by examining the robustness of FFF's empirical results . In particular, you are to conduct an experiment based on FFF's (5/5)- and (8/2)-games, using a slightly modified design and Holy Cross subjects.

2. Group Assignment

The first half of the assignment is a collaborative research project. I will set deadlines and assign responsibilities. Tasks might include writing instructions and scripts, preparing and assembling documents, recruiting, sending out reminders, and conducting the experiment (signing in subjects, reading instructions, executing procedures, and paying subjects).

The experiment is tentatively scheduled for 3:30 p.m. and 7 p.m. on Wednesday, March 20, 2002. As needed, we will use some of our Thursday labs to discuss and prepare the experiment.

One important note about cash payments. We will expend $300 to $400 on the experiment, generously provided by the Department of Economics. When subjects are given a cash payment, they must sign a receipt form with the date and their social security number. The next day after the experiment, you must provide me with receipts and/or leftover cash. If you fail to get one or more receipts, you owe me the equivalent in cash.

3. Individual Assignment

Prior to the experiment you will be asked to read carefully the paper by FFF. I also recommend that you give attention to related papers listed on your syllabus. You will find that the more you immerse yourself in the topic, the better paper you are likely to write.

Once the experiment is completed, you are required to work independently. Study and analyze the data from the experiment. Organize the data in suitable tables and/or diagrams, and conduct one or more appropriate statistical hypothesis tests. Relate the results explicitly to the research question and to FFF's original findings.

Write a first draft of your paper. Assume your reader is knowledgeable in microeconomics, game theory, and experimental economics, but is not familiar with the issues or experiments involved in this assignment. Use language understandable to both you and your reader; define specialized terms if needed. There is no length requirement for the paper. Use your discretion. An excellent paper might be as short as eight or twelve pages of text plus endnotes, references, tables, and figures.

In the scholarly world, do as the scholars do. Try to imitate the tone and organizational style of the published articles that you read in this course. For example, break your paper down into sections. Most papers can be organized something like this: introduction, including a clear statement of the research question, motivation, and a review of previous research; hypotheses, design, and procedures; results and analysis; and conclusion.

In your paper you must use the author-and-year pattern of citing references. This means that citations must be by last name and date of publication, and they will usually be placed within the text rather than in endnotes. Use endnotes for elaboration and discussion tangential to the flow of the text. Pick a format for the references page and use it consistently. A good model to use is that found in the American Economic Review. Another is found in FFF.

Plagiarism is forbidden and may result in a grade of F for the assignment. For guidance, read the attached excerpt from Fowler, The Little, Brown Handbook (1980). Again, mimic the citation practices of the papers that you read for this course. It should be obvious that your paper will require one or more citations to Falk, Fehr, and Fischbacher (forthcoming). The initial citation should be by author and year (or in this case, forthcoming). Indicate that the authors will hereafter be referred to as FFF (see above). Subsequent reference to Falk, Fehr, and Fischbacher need not be by formal author-year citation, as long as the reference is clear from the context and does not involve a specific quote or paraphrase.

The paper should be typed and double-spaced. Assemble the elements of the paper in the following order: title page, text, references, endnotes, tables, and figures, plus an appendix including any statistical software output. Your name should appear only on the title page.

For more guidance in writing the paper, you might consult Singleton et al. (1993), pp. 502-509. You are permitted to use the Writing Workshop for assistance. Also, you are free to show me a draft of part or all of your paper. If you give sufficient lead-time, I will try to provide feedback on the paper's organization and content.

Complete and turn in a final draft of your paper. Follow directions. Refer back to these instructions frequently. I will grade your paper based on its organization, clarity, content, and quality of writing. I put a premium on good writing and professional appearance. Proofread carefully. When you leave Holy Cross, you will find that if you don't show respect for your written product, no one else will.

The paper is due no later than 4:30 p.m., Tuesday, April 30, 2002. Remember that college computer resources are in high demand at that time. Late papers will be penalized one grade level (A, A-, B+, etc.) for each twenty-four hour weekday interval of lateness.

4. References (see also the course syllabus)