Ultimatum Offers and the Role of Transparency: An Experimental Study of Information Acquisition

Thomas P. Gehrig, Werner Güth () and René Levínský ()

Discussion Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: This paper analyses individual information acquisition in an ultimatum game with a-priori unknown outside options. We find that while individual play seems to accord reasonably well with the distribution of empirical behavior, contestants seem to grossly overweigh the value of information. While information acquisition seems to be excessive in all of our scenarios we identify a significant difference in behavior related to market transparency. In transparent markets, when respondents can observe whether bidders have acquired information, acceptance rates are higher. Accordingly, information is more valuable in transparent markets, both individually and socially.

New Economics Papers: this item is included in nep-com and nep-exp
Date: 2003-06
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