What Limits Emotional Escalation? – VaryingThreat Power in an Ultimatum Experiment

Threat power is the ability to impose a great loss on someone else at relativelylow own cost and can be measured by the ratio of other’s and own loss. It can bevaried by assuming that rejecting an ultimatum reduces the payoff of the proposerto its lambda–share and that of the responder to its (1 − lambda)–share where 0 =lambda= 1.Results demonstrate that proposers become more greedy when lambda is high whereasresponders adjust to threat power, but punish greed to a high extent irrespective ofown rejection cost.