A Tale of Two Tails

Abstract

We present a three-player game in which a proposer makes a suggestion on how to split $10 with a passive responder. The offer is accepted or rejected depending on the strategy profile of a neutral third-party whose payoffs are independent from his decisions. If the offer is accepted the split takes place as suggested, if rejected, then both proposer and receiver get $0. Our results show a decision-maker whose main concern is to reduce the inequality between proposer and responder and who, in order to do so, is willing to reject both selfish and generous offers.This pattern of rejections is robust through a series of treatments which include changing the "flat-fee" payoff of the decision-maker, introducing a monetary cost for the decision-maker in case the offer ends up in a rejection, or letting a computer replace the proposer to randomly make the splitting suggestion between proposer and responder. Further, through these different treatments we are able to show that decision- makers ignore the intentions behind the proposers suggestions, as well as ignoring their own relative payoffs, two surprising results given the existing literature.