Bounded Rationality in Bargaining Games: Do Proposers Believe That Responders Reject an Equal Split?

Ben Greiner

No 11, Working Paper Series in Economics from University of Cologne, Department of Economics

Abstract: Puzzled by the experimental results of the 'impunity game' by Bolton and Zwick (1995) we replicate the game and alter it in a systematic manner. We find that although almost nobody actually rejects an offered equal split in a bargaining game, proposers behave as if there would be a considerably large rejection rate for equal splits. This result is inconsistent with existing models of economic decision making. This includes models of selfish players as well as models of social utility and reciprocity, even when combined with erroneous decision making. Our data suggests that subjects fail to foresee their opponent's decision even for one step in our simple bargaining games. We consider models of bounded rational decision making such as rules of thumb as explanations for the observed behavioral pattern.

Keywords: ultimatum game; dictator game; impunity game; social utility; bounded rationality (search for similar items in EconPapers)
JEL-codes: C72 C92 D3 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004-06-19
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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