Social comparisons differentially affect fair and unfair processing in ultimatum bargaining

Several theoretical frameworks have attempted to illustrate the influence of social contexts on decision-making and well-being. Traditional economic models assume that absolute income is the crucial determinant of one's well-being, while the comparative models state that social comparisons influence and even determine well-being and decisions. Here we investigated the impact of social comparisons on decision-making using a modified three-player Ultimatum Game and ERP technique. We found two independent effects: First, social comparisons did not affect decision-making when a fair norm was enforced. Second, social comparisons affected fairness consideration for unfair offers only-responders were less likely to accept unfair offers in upward comparisons but more likely to accept unfair offers in downward comparisons. These results revealed that people were envy-free of fair offers while affected mainly by social comparisons when the equality norm was broken. Event-related brain potentials showed that in the early time window (260-320 ms), compared to fair offers, unfair offers elicited a larger negative-going medial frontal negativity (MFN) in upward than parallel and downward comparisons, and in the late stage (320-650 ms), compared to fair offers, unfair offers led to equally less positive-going P300 in upward and downward comparisons relative to parallel comparison. Although partly consistent with the relative standing assumption, both traditional economic models and comparative models require revision to account for the results.