From Ultimatum to Nash Bargaining: Theory and Experimental Evidence

Sven Fischer, Werner Güth () and Wieland Müller

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

Abstract: We examine the strategic behavior of first and second movers in a 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. If the second mover is informed, she can either accept or reject the offer and payoffs are determined as in the ultimatum game. If she is not informed, the second mover states her 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 a signal.

Keywords: commitment; imperfect observability; ultimatum bargaining game; Nash bargaining game; experiments (search for similar items in EconPapers)
JEL-codes: C72 C78 C92 (search for similar items in EconPapers)
Pages: 32 pages
New Economics Papers: this item is included in nep-exp and nep-gth
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Citations: View citations in EconPapers (1)

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Journal Article: From ultimatum to Nash bargaining: Theory and experimental evidence (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:esi:discus:2003-07

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