Abstract

We demonstrate that a simple model, constructed on the premise that people are motivated by both their pecuniary payoff and their relative payoff standing, explains behavior in a wide variety of laboratory games. Included are games where equity is thought to be a factor, such as ultimatum, two-period alternating offer, and dictator games; games where reciprocity is thought to play a role, such as the prisoner’s dilemma and the gift exchange game; and games where competitive behavior is observed, such as Bertrand and Cournot markets, and the guessing game.

Citations