The Role of Envy in Ultimatum Games

Abstract: The behaviour of subjects in ultimatum bargaining experiments is very different from that predicted by standard theory. These "anomalies" are frequently explained by fairness considerations. In this paper we consider the possibility that the subjects are simply envious. We derive the implications of envy for the behaviour in ultimatum games and it will be shown that envy is a potential explanation for the most important experimental results. This points toward the need to set up experiments which allow to discriminate between fairness- and envy-motivated behaviour.;