Dissolving an ambiguous partnership

Jörg Oechssler and Alex Roomets

No 733, Working Papers from University of Heidelberg, Department of Economics

Abstract: Two partners try to dissolve a partnership that owns an asset of ambiguous value, where the value is determined ex post by a draw from an Ellsberg urn. In a within-subject experiment, subjects make decisions in three different bargaining mechanisms: unstructured bargaining, the Texas shoot-out, and a K + 1 auction. We find that the K +1 auction is the most e¢ cient mechanism, which is in line with theory. Free format bargaining yields a surprising number of disagreements, which are not usually observed when the partnership has a certain or risky value.

Keywords: bargaining; ambiguity; experiment (search for similar items in EconPapers)
Date: 2023-09-22
New Economics Papers: this item is included in nep-exp and nep-ger
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Persistent link: https://EconPapers.repec.org/RePEc:awi:wpaper:0733

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