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When knowledge is not power: Asymmetric information, probabilistic deceit detection and threats in ultimatum bargainingAuthor-Name: Chavanne, David

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  • Ferreira, Mark

Abstract

We find that probabilistic deceit detection and cheap-talk threats enhance the fairness and honesty of a bargainer who possesses advantageous information and has the opportunity to be deceitful. In our ultimatum game, only proposers know the size of the pie. Proposers, therefore, have the option to understate the pie size and make their offer appear fairer than it really is. The separate and interactive effects of probabilistic deceit detection and cheap-talk threats have implications for how exchange can be facilitated by mechanisms that detect deceit and/or enable buyer communication in markets where sellers have informational advantages.

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  • Ferreira, Mark, 2017. "When knowledge is not power: Asymmetric information, probabilistic deceit detection and threats in ultimatum bargainingAuthor-Name: Chavanne, David," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 4-17.
    • Handle: RePEc:eee:soceco:v:69:y:2017:i:c:p:4-17
    DOI: 10.1016/j.socec.2017.05.004
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    4. Neilson, William & Price, Michael & Wichmann, Bruno, 2018. "Added surplus and lost bargaining power in long-term contracting," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 76(C), pages 7-22.

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    More about this item

    Keywords

    Asymmetric information; Deception; Ultimatum games; Cheap talk; Threats;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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