Not Fair but Acceptable... For Us! Group Membership Influences the Tradeoff Between Equity and Utility in the Ultimatum Game

Two Experiments investigated the influence of social categorization on economic decision-making and inequity aversion. Specifically, we employed a modified version of the third party Ultimatum Game comprising three roles: 1 - a Proposer who splits resources between himself and a Receiver; 2 - a Receiver who is the final beneficiary of the offer; 3 - a Responder who make the decision about the offer acceptance or rejection. If the offer is accepted resources are split as proposed and if it is refused participants gain nothing. Since in the latter case utility is no longer maximized a violation of the standard economic theory occurs. In both Experiments participants played the role of responder and were asked to make decisions for themselves or for another person, either an ingroup or an outgroup member. Group membership varied between-participants and was induced according to the minimal group paradigm. The first Experiment (N=96) showed that people are prone to reject unfair offers that are advantageous for the proposer and to accept unfair offers that are advantageous for the receiver. Moreover, the findings revealed that participants were more likely to accept unfair-advantageous offers when the receivers were ingroup rather than outgroup members. The second Experiment (N=61) investigated weather group identification moderated the relationship between social membership, utility and economic decision-making. Moreover, we employed a design where in third party versions the utility of the participant was bounded to the receiver’s one. Thus, a rejection would affect both the receiver’s utility and the participant’s gain. Analyses on the responses to different offers of the Ultimatum Game and on reaction times consistently showed that individuals tend to be less likely to accept an advantageous offer when they play for an outgroup member than when they decide for themselves or for an ingroup member. Moreover, this effect is stronger for those who were highly identified with their group. Taken together, integrating research on economic decision making and work on intergroup bias, these findings show that the membership of the target of the utility can resolve the conflict between inequity aversion and utility maximization.