ABSTRACT
One of the most robust findings in experimental economics is that many individuals in one-shot ultimatum games reject unfair offers, leaving themselves and their bargaining partner with a zero payoff. Puzzlingly, rejection rates are robust to substantial increases in stakes, leading players to forego significant sums of money. This study uses a new approach to measure price effects in ultimatum games. By combining an experimental design that elicits a significant number of low offers with an environment that permits use of much larger stakes than in the literature, we are able to examine price effects over ranges of data that are heretofore unexplored. Our main result is that proportionally equivalent offers are significantly less likely to be rejected with high stakes, even in one-shot play with inexperienced subjects. In fact, our paper is the first to present evidence that as stakes increase-to 1600 labor market hours-individual behavior approaches the subgame perfect equilibrium prediction.