From ultimatum to Nash bargaining: Theory and experimental evidence

Sven Fischer (), Werner Güth (), Wieland Müller and Andreas Stiehler

Experimental Economics, 2006, vol. 9, issue 1, 17-33

Abstract: We consider a sequential two-party bargaining game with uncertain information transmission. When the first mover states her demand she does only know the probability with which the second mover will be informed about it. The informed second mover can either accept or reject the offer and payoffs are determined as in the ultimatum game. Otherwise the uninformed second mover states his own demand and payoffs are determined as in the Nash demand game. In the experiment we vary the commonly known probability of information transmission. Our main finding is that first movers’ and uninformed second movers’ demands adjust to this probability as qualitatively predicted, that is, first movers’ (uninformed second movers’) demands are lower (higher) the lower the probability of information transmission. Copyright Springer Science + Business Media, LLC 2006

Keywords: Commitment; Imperfect observability; Ultimatum bargaining; Nash bargaining; Experiments (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (22)

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DOI: 10.1007/s10683-006-1468-0

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