Subgame perfection in ultimatum bargaining trees

Dale O. Stahl and Ernan Haruvy

Games and Economic Behavior, 2008, vol. 63, issue 1, pages 292-307

Abstract: In typical experiments on ultimatum bargaining, the game is described verbally and the majority of subjects deviate from subgame-perfect behavior. Proposers typically offer significantly more than the minimum possible and Responders reject "unfair" offers. In this work, we show that when the ultimatum bargaining game is presented as an abstract game tree, the vast majority of behavior is consistent with individualistic preferences and subgame-perfection. This finding raises doubts about theories that ignore the potential influence of social context and experiments that do not control for social context.

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