Evidence of general economic principles of bargaining and trade from 2,000 classroom experiments

Abstract

Standardized classroom economics experiments provide a treasure trove of evidence about how well results reproduce when nearly-identical methods are used. We use a sample of around 20,000 observations to test reproducibility in bargaining and trading. Ultimatum bargaining exhibits some geographical variation, and shows that equal split offers are accepted more often and more quickly than slightly unequal offers. Double auction results are highly reproducible and are close to equilibrium predictions. Our large sample shows robust, strong correlations between how individual surplus and trading order, and autocorrelation (0.5) of successive price changes, consistent with trading dynamics based on limited rationality.

The role of emotion regulation and choice repetition bias in the ultimatum game.

“…The general effects of the game were significant across comparisons involving children and adolescents and consistent with previous studies on adult responder behavior as unfair offers (a) were more likely to be rejected, (b) evoked more negative valence, and (c) were linked to an increased RT when being accepted and decreased RT when being rejected (e.g., Kravitz & Gunto, 1992; Lin et al, 2020). These findings establish support that the responder behavior of children and adolescents in the ultimatum game follows the dual-process account, which may provide the theoretical basis for future work in social decision-making to utilize this paradigm and framework to investigate longitudinal differences and differences in atypically developing populations.…”

Conducting large, repeated, multi-game economic experiments using mobile platforms

“…Our 2-player ultimatum game follows [1]. We find that offers from the proposer to the responder are mostly 50 percent of the pie or less, and the conditional acceptance rate is monotonically increasing in the proposed offer amount, which is consistent with [31,32]. A direct comparison of our dataset and that from [31] generates similar results in the distribution of proposal offers and conditional acceptance rate (see Section B in S1 File for details).…”

Competitive equilibrium and the double auction

“…As Plott (1981) puts it in an early review of the literature: 'The overwhelming result [from these experiments] is that these markets converge to the competitive equilibrium even with very few traders'. In a more recent study of two thousand classroom experiments, Lin et al (2020) reach a similar conclusion, declaring that competitive equilibrium convergence in double auctions appears to be 'as close to a culturally universal, highly reproducible outcome as one is likely to get in social science'. They add that such convergence should be considered 'as reproducible as the kinds of experiments that are done in a college chemistry laboratory to demonstrate universal chemistry principles '.…”

“…As one indication of this, 99.5% of bids and asks made in our experiments were 'individually rational' in the sense that they would have made a (non-negative) profit if accepted. This compares favourably to existing auction datasets: for example, the dataset used by Lin et al (2020) involves individual rationality violations in 90% of rounds (see Arifovic et al (2022) for discussion). 12…”