Fehr-Schmidt model and the Ultimatum Game [Economics]

In summary, the speaker is having trouble understanding a notation used in a paper and is unsure if they have made a mistake in their calculation. They specifically mention the equation s'(α2)= α2/(1+α2) and question if it is the first derivative of the proposed function. They also ask for feedback on their understanding.
  • #1
Kolmin
66
0
I am perfectly aware that an answer to this question could take slightly more than the usual, but this thing is making me nut. I don’t get if I make some sort of mistake in terms of calculation or if the authors use a peculiar notation.

This is the paper that I am referring to, in particular page 826-828.

My problem is with s'(α2)= α2/(1+α2).
It seems to me, this cannot be the first derivative of the proposal that has to be made as a function of the parameter α2. Instead, it is simply the explicit version of s(α2)= α2/(1+α2) [then, no derivative around...]

Do I miss something?

Thanks for your feedbacks. :smile:
 
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  • #2
hey. this is fairly easy. just calculate conditioned on the fact that utility should be bigger than 0, when proposer offers smaller than 0.5 :)
 

1. What is the Fehr-Schmidt model?

The Fehr-Schmidt model is an economic model proposed by Ernst Fehr and Klaus Schmidt in 1999. It is a variation of the classic Ultimatum Game that incorporates fairness preferences in addition to self-interest. It is used to study decision-making and behavior in situations where fairness and social norms play a role.

2. How does the Fehr-Schmidt model differ from the classic Ultimatum Game?

The Fehr-Schmidt model differs from the classic Ultimatum Game in that it introduces the concept of fairness preferences. In the classic game, individuals are assumed to be solely motivated by self-interest. However, in the Fehr-Schmidt model, individuals also care about fairness and will reject offers that they perceive as unfair, even if it means receiving less money.

3. What are the implications of the Fehr-Schmidt model?

The Fehr-Schmidt model has several implications for decision-making and behavior. It suggests that individuals are not solely motivated by self-interest and that fairness plays a significant role in decision-making. It also highlights the importance of social norms and the impact they have on individual behavior.

4. How is the Fehr-Schmidt model used in research?

The Fehr-Schmidt model is used in research to study decision-making and behavior in a variety of contexts. It has been applied to various economic scenarios, such as labor markets, bargaining, and charitable giving. It has also been used to study decision-making in other fields, such as psychology and sociology.

5. What are the criticisms of the Fehr-Schmidt model?

One criticism of the Fehr-Schmidt model is that it oversimplifies human behavior by assuming that individuals have fixed preferences for fairness. In reality, these preferences may vary depending on the situation and other factors. Additionally, some argue that the model does not account for cultural and societal differences in perceptions of fairness.

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