Abstract: In recent years a large number of experimental studies have documented the existence of strong reciprocity among humans. Strong reciprocity means that people willingly repay gifts and punish the violation of cooperation and fairness norms even in anonymous one-shot encounters with genetically unrelated strangers. We provide historical and experimental evidence suggesting that ultimate theories of kin selection, reciprocal altruism, costly signaling and indirect reciprocity do not provide satisfactory evolutionary explanations of strong reciprocity. The problem of these theories is that they can rationalize strong reciprocity only if it is viewed as maladaptive behavior whereas the evidence suggests that it is an adaptive trait. Thus, we conclude that alternative evolutionary approaches are needed to provide ultimate accounts of strong reciprocity. 1 This paper is part of a research project on strong reciprocity financed by the Network on Economic Environments and the Evolution of Individual Preferences and Social Norms of the MacArthur Foundation. Fehr and Henrich In recent years a large body of evidence has emerged from laboratory experiments indicating that a substantial fraction of people willingly repay gifts and punish the violation of cooperation and fairness norms, even in anonymous one-shot encounters with genetically unrelated strangers (see,

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Shelly Lundberg for their helpful comments, to Joanne Spitz for editorial assistance, and to Lars Hansen and Jim Heckman for inviting me to participate in the symposium. Their invitation read in part, "We would like you to discuss his and other work on household and family economics, including its importance to social science and policy. We would like this to be a serious assessment of research, more than just superficial praise. " Robert A. Pollak Washington University in St. Louis "Gary Becker's Contributions to Family and Household Economics" Gary Becker's influence on the economics of the family has been pervasive. His ideas have dominated research in the economics of the family, shaping the tools we use, the questions we ask, and the answers we give. The foundational assumptions of Becker's economic approach to the family-- maximizing behavior and equilibrium-- as well as such primary auxiliary assumptions as household production and interdependent preferences, are now widely accepted not only by economists but also by family sociologists, demographers, and others who study the family. Yet the interesting and provocative implications of Becker's economic approach to the family do not follow

Adaptive dynamics describes the evolution of games where the strategies are continuous functions of some parameters. The standard adaptive dynamics framework assumes that the population is homogeneous at any one time. Di!erential equations point to the direction of the mutant that has maximum payo! against the resident population. The population then moves towards this mutant. The standard adaptive dynamics formulation cannot deal with games in which the payo! is not di!erentiable. Here we present a generalized framework which can. We assume that the population is not homogeneous but distributed around an average strategy. This approach can describe the long-term dynamics of the Ultimatum Game and also explain the evolution of fairness in a one-parameter Ultimatum Game. � 2001 Academic Press 1.

This paper presents a model in which a durable goods monopolist sells a product to two buyers. Each buyer is privately informed about his own valuation. Thus all players are imperfectly informed about market demand. We study the monopolist’s pricing behavior as players’ uncertainty regarding demand vanishes in the limit. In the limit, players are perfectly informed about the downward-sloping demand. We show that in all games belonging to a fixed and open neighborhood of the limit game there exists a generically unique equilibrium outcome that exhibits Coasian dynamics and in which play lasts for at most two periods. A laboratory experiment shows that, consistent with our theory, outcomes in the Certain and Uncertain Demand treatments are the same. Median opening prices in both treatments are roughly at the level predicted and considerably below the monopoly price. Consistent with Coasian dynamics, these prices are lower for higher discount factors. Demand withholding, however, leads to more trading periods than predicted.

In the Ultimatum Game, two players are asked to split a prize. The first player, the proposer, makes an offer of how to split the prize. The second player, the responder, either accepts the offer, in which case the prize is split as agreed, or rejects it, in which case neither player receives anything. The rational strategy suggested by classical game theory is for the proposer to offer the smallest possible positive share and for the responder to accept. Humans do not play this way, however, and instead tend to offer 50 % of the prize and to reject offers below 20%. Here we study the Ultimatum Game in an evolutionary context and show that empathy can lead to the evolution of fairness. Empathy means that individuals make offers which they themselves would be prepared to accept.

On May 11, 2001, readers of the Berliner Zeitung were invited to participate in an ultimatum bargaining experiment played in the strategy vector-mode: Each participant chooses not only how much (s)he demands of the DM 1.000-pie but also which of the nine possible offers of DM 100, 200, ..., 900 (s)he would accept or reject. In addition, participants were asked to predict the most frequent type of behavior. Three randomly selected proposer-responder pairs were rewarded according to the rules of ultimatum bargaining and three randomly chosen participants of those who predicted the most frequent type of behavior received a prize of DM 500. Decisions could be submitted by mail, fax, or via the internet. Behavior is described, statistically analyzed, and compared to usual laboratory ultimatum bargaining results.

In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, firms can choose their quantities in one of two periods before the market clears. If a firm commits to a quantity in period 1 it does not know whether the other firm also commits early. By waiting until period 2, a firm can observe the other firm’s period 1 action. Hamilton and Slutsky predict the emergence of endogenous Stackelberg leadership. Our data, however, does not confirm the theory. While Stackelberg equilibria are extremely rare we often observe endogenous Cournot outcomes and sometimes collusive play. This is partly driven by the fact that endogenous Stackelberg followers learn to behave in a reciprocal fashion over time, i.e., they learn to reward cooperation and to punish exploitation.

We investigate the predictive success of the Baron-Ferejohn model of legislative bargaining in laboratory environments. In particular, we use a finite period bargaining game under weighted majority rule where a fixed payoff is divided between three players. In each period one of the players is chosen according to a known rule to make a proposed allocation of a fixed sum among the three players. The proposal is then voted on, and if rejected, another proposer is selected until a proposal is accepted or the final period is reached. We find that our subjects ’ behavior is not predicted well by the Baron-Ferejohn model. The model predicts hardly better than a coin flip which coalition partner is selected by the chosen proposer, and proposers allocate more money to other players than predicted. In a significant minority of coalitions the sum is allocated equally across all three players. A sizable number of proposals are rejected in the first proposal periods and subjects who vote to reject a proposal on average receive a higher payoff from the new proposal. An alternative explanation of coalition bargaining outcomes based

The findings on the ultimatum game are considered as belonging to the most robust experimental results. In this paper we present a slightly altered version of the mini ultimatum game of Bolton and Zwick (1995). Whereas in the latter exactly equal splits were feasible in our games these were replaced by nearly equal splits favoring (slightly) the proposer in one version and the responder in a second version. Such a minor change should not matter if behavior was robust. We found, however, a behavioral discontinuity in the sense that fair offers occur less often when equal splits are replaced by nearly equal splits. This has implications for theories incorporating fairness into economics.