Lecture Plan: First, we will run the ultimatum game experiment in class. Then we will analyze the game, using tools from game theory to solve the game. Then we will discuss the mismatch between theory and experimental outcomes. There are two levels to this discussion. First, what is wrong with the theory, and how can it be fixed? Second, this problem has been known to economists for decades - why is it never mentioned in textbooks? This second deeper question leads into a discussion of methodology: what kinds of theories are acceptable, what do we do in case there is conflict between theories and evidence, how do we build and revise theories.
NOTE: This lecture was not recorded - there is no video for it.
READINGS FOR ULTIMATUM GAME
Chapter 2 - written up after the class, based on results obtained in class -- discusses the Ultimatum Game results which we saw in the class, and how they relate to models and methodology.
In connection with the Ultimatum experiment, students should do the following reading:
REQUIRED:
1: Behavioral Versus Neoclassical Economics (WEAP Blog)
RECOMMENDED:
2: Game Theory for Humans with Hearts (WEAP Blog)
Background Reading for Greater Depth (Optional)
3: Zaman, Asad and Karacuka, Mehmet," The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature," International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414, Available at SSRN: https://ssrn.com/abstract=2033641
4. Colin Camerer: Behavioral Game Theory - Chapters 1 and 2