An Experimental Analysis of Equal Punishment Games

Abstract

In equal punishment games first the proposer suggests how to split the pie, i.e. a positive monetary reward. Unlike in the ultimatum game, the responder can decide among many (for proposer and responder) equal penalty payments. To exclude negative payoffs, punishment was bounded from above depending on the proposal and the (for proposer and responder) same show up-fee, our only treatment variable. Although inequality aversion (Bolton and Oekenfels, 1999, and Fehr and Schmidt, 1999) predicts zero-punishments, we observe positive punishments which, however, became smaller in the repetition. Initial fairness is often substituted in the repetition by extreme greed. Whereas greed is sticky, fairness is more characteristic for initial inclinations and not a stable behavioral pattern.