When proposers demand less without need – Ultimatum bargaining in the loss domain –

Stephan Schosser () and Bodo Vogt ()
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Stephan Schosser: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Bodo Vogt: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg

No 150009, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: Subjects in the loss domain tend to split payoffs equally when bargaining. The ultimatum game offers an ideal mechanism through which economists can investigate whether equal splits are the consequence of proposer generosity or due to their anticipation that the responders will reject lower offers. This paper experimentally compares ultimatum bargaining in a loss domain with that under gains. The results reveal that, although responders do not expect more in the loss domain, proposers do make higher offers. As such, proposers reach agreements more often in the loss domain than they do in the gains domain, and responders receive higher payoffs.

Keywords: Ultimatum bargaining; losses; equal split; experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C92 D74 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2015-07
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:mag:wpaper:150009

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