How to Model Heterogeneity in Costly Punishment: Insights from Responders' Response Times

Abstract

We investigate what processes may underlie heterogeneity in social preferences. We address this question by examining participants' decisions and associated response times across 12 mini-ultimatum games. Using a finite mixture model and cross-validating its classification with a response time analysis, we identified four groups of responders: one group takes little to no account of the proposed split or the foregone allocation and swiftly accepts any positive offer; two groups process primarily the objective properties of the allocations (fairness and kindness) and need more time the more properties need to be examined; and a fourth group, which takes more time than the others, appears to take into account what they would have proposed had they been put in the role of the proposer. We discuss implications of this joint decision-response time analysis.

Strategic risk and response time across games

“…Arad and Rubinstein [2012] make an effort to strip off of social content the situation faced by their experimental subjects. Our work and findings are closer to works dealing with the cross effects of reflection (RT in our case) and social concerns on behavior (e.g., Knoch and Fehr [2007], Piovesan and Wengstrom [2009], Rand et al [2012], Fischbacher et al [2013]). Unlike in Rand et al [2012], we do not find that reflection leads to a depletion of intuitive cooperative attitudes.…”

“…Rejecting unfair offers requires more self control (Knoch and Fehr [2007]) or longer RT (our study). In a very innovative study, Fischbacher et al [2013] address procedural heterogeneity among subjects. They find that different types of subjects (as identified from behavior in several ultimatum games) display different behavioral effects of RT .…”

The BCD of Response Time Analysis in Experimental Economics

“…Guida and Devetag (2013) combine eye-tracking and RT analysis in normal-form games, and find that RT was shorter for games with a clear focal point, and longer for Nash equilibrium choices. Fischbacher et al (2013) find that participants' behavior, although heterogeneous, is consistent with the sequential application of three motives in lexicographic fashion. The more motives that are considered, the longer the RT, e.g., a selfish type only examines own payoffs, whereas a pro-social type must also examine others' payoffs.…”

“…The contradictory findings for games where social preferences are dominant provide striking evidence of this. Some studies conclude that RT is lower for self-interested choices (Brañas-Garza et al 2016;Fischbacher et al 2013;Matthey and Regner 2011;Piovesan and Wengström 2009), whereas other studies find that the equitable or ''fair'' split is associated with a lower RT (Cappelletti et al 2011;Halali et al 2011;Lotito et al 2013). Under the auxiliary assumption that instinctive choices require less time, these studies arrive at opposing conclusions of what behavior has evolved to be instinctive.…”

“…Another class of heuristics that have been applied to strategic DM are decision trees, which structure the decision processes as a series of sequential operations conditional on the history of prior operations, eventually leading to a terminal node that determines the final decision. Empirical investigations of decision trees in the ultimatum game can be found in Fischbacher et al (2013) and Hertwig et al (2013).…”