Analysis on the Relation Between Stake Size Effect and Fehr-Schmidt's Parameters

Jiaming Fan
2021 Advances in Economics, Business and Management Research   unpublished
Stake Size Effect demonstrates the phenomenon that in Ultimatum Game, individuals have much lower rejection rates when facing the same proportion of offers but with higher stake sizes. This article relates the Stake Size Effect with the Fehr-Schmidt model, which is one of the most important models in explaining the role of fairness in bargaining games. The author was interested in finding a simple relationship between stake size and parameters of inequity in the Fehr-Schmidt model. The model
more » ... first built based on data collected in Andersen et al.'s experiment by using linear regression technique and then checked with other empirical data [1] . Although the result shows a large difference between experiments as the effectiveness of the built model varies in a wide range, a rough trend between the change of log stake size and the change of log parameters can be seen.
doi:10.2991/assehr.k.211209.534 fatcat:tdsf3z73bnb33ifilqmvrmy6me