 Bargaining with own-preference uncertainty: An experimentRegev Bar and Aaron Nicholas European Economic Review, 2024, vol. 162, issue C Abstract: While ‘standard’ theory argues that more information typically increases efficiency from exchange, the literature on fairness and bargaining suggests that information may inhibit agreements. However, the literature has typically focussed on information related to the payoffs of the other party. In many real-world interactions, a buyer is uncertain about their own value for a good they are purchasing. We consider a series of modified ultimatum games where we vary buyers’ certainty about their own values. We find that agreements increase when buyers discover their values. However, buyers potentially lose from this discovery if they are uncertain about sellers’ costs. Our results are driven by an increased aversion towards uncertainty when buyers are uncertain about both their own and the seller's payoff. This ‘twofold uncertainty effect’ cannot be rationalised by outcome-based other-regarding preferences and extends current understanding of the influence of uncertainty on perceptions of fair exchange. Keywords: Own-preference uncertainty; Fair price; Uncertainty effect; Bargaining experiment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:162:y:2024:i:c:s0014292123002799 DOI: 10.1016/j.euroecorev.2023.104651 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.