From Ultimatum to Nash Bargaining: Theory and Experimental Evidence
AbstractWe 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2003-07.
Length: 32 pages
Date of creation:
Date of revision:
Other versions of this item:
- Sven Fischer & Werner GÃ¼th & Wieland MÃ¼ller & Andreas Stiehler, 2006. "From ultimatum to Nash bargaining: Theory and experimental evidence," Experimental Economics, Springer, vol. 9(1), pages 17-33, April.
- Fischer, S. & Güth, W. & Stiehler, A. & Müller, W., 2003. "From Ultimatum to Nash Bargaining: Theory and Experimental Evidence," Discussion Paper 2003-41, Tilburg University, Center for Economic Research.
- Fischer, S. & Güth, W. & Müller, W. & Stiehler, A., 2006. "From ultimatum to Nash bargaining: Theory and experimental evidence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-193644, Tilburg University.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-13 (All new papers)
- NEP-EXP-2003-04-13 (Experimental Economics)
- NEP-GTH-2003-04-13 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kyle Bagwell, 1992.
"Commitment and Observability in Games,"
1014, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Huck, Steffen & Muller, Wieland, 2000.
"Perfect versus Imperfect Observability--An Experimental Test of Bagwell's Result,"
Games and Economic Behavior,
Elsevier, vol. 31(2), pages 174-190, May.
- Steffen Huck & Wieland Mueller, 1998. "Perfect versus imperfect observability---An experimental test of Bagwell's result," Experimental 9804001, EconWPA.
- John B Van Huyck & Raymond C Battalio & Richard O Beil, 1997.
"Tacit coordination games, strategic uncertainty, and coordination failure,"
Levine's Working Paper Archive
1225, David K. Levine.
- Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-48, March.
- J. B. Van Huyck & R. C. Battalio & R. O. Beil, 2010. "Tacit coordination games, strategic uncertainty, and coordination failure," Levine's Working Paper Archive 661465000000000393, David K. Levine.
- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Straub, Paul G., 1995. "Risk dominance and coordination failures in static games," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(4), pages 339-363.
- Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
- Damme, E.E.C. van & Hurkens, J.P.M., 1997.
"Games with imperfectly observable commitment,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-74216, Tilburg University.
- Guth, Werner, 1995. "On ultimatum bargaining experiments -- A personal review," Journal of Economic Behavior & Organization, Elsevier, vol. 27(3), pages 329-344, August.
- Harsanyi John C., 1995.
"A New Theory of Equilibrium Selection for Games with Incomplete Information,"
Games and Economic Behavior,
Elsevier, vol. 10(2), pages 318-332, August.
- Harsanyi, John C., 1995. "A new theory of equilibrium selection for games with complete information," Games and Economic Behavior, Elsevier, vol. 8(1), pages 91-122.
- Amnon Rapoport, 1997. "Order of Play in Strategically Equivalent Games in Extensive Form," International Journal of Game Theory, Springer, vol. 26(1), pages 113-136.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, January.
- Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1991. "Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 885-910, August.
- Antonio Cabrales & Walter Garcia Fontes & Massimo Motta, 1997.
"Risk dominance selects the leader. An experimental analysis,"
Economics Working Papers
222, Department of Economics and Business, Universitat Pompeu Fabra.
- Cabrales, Antonio & Garcia-Fontes, Walter & Motta, Massimo, 2000. "Risk dominance selects the leader: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 137-162, January.
- Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990.
"Observable Contracts: Strategic Delegation and Cooperation,"
879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August.
- Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-91, June.
- Anders U. Poulsen & Michael W. M. Roos, 2009.
"Do people make strategic commitments? Experimental evidence on strategic information avoidance,"
Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS)
09-01, School of Economics, University of East Anglia, Norwich, UK..
- Anders Poulsen & Michael Roos, 2010. "Do people make strategic commitments? Experimental evidence on strategic information avoidance," Experimental Economics, Springer, vol. 13(2), pages 206-225, June.
- Anders Poulsen & Michael Roos, 2010. "Do People Make Strategic Commitments? Experimental Evidence on Strategic Information Avoidance," University of East Anglia Applied and Financial Economics Working Paper Series 007, School of Economics, University of East Anglia, Norwich, UK..
- Werner Güth & Martin G. Kocher, 2013.
"More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature,"
Jena Economic Research Papers
2013-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Werner Güth & Martin G. Kocher, 2013. "More than Thirty Years of Ultimatum Bargaining Experiments: Motives, Variations, and a Survey of the Recent Literature," CESifo Working Paper Series 4380, CESifo Group Munich.
- Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany.
- Güth, W. & Müller, W. & Spiegel, Y., 2006.
"Noisy leadership: An experimental approach,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-193643, Tilburg University.
- Avrahami, Judith & Güth, Werner & Hertwig, Ralph & Kareev, Yaakov & Otsubo, Hironori, 2013.
"Learning (not) to yield: An experimental study of evolving ultimatum game behavior,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 47(C), pages 47-54.
- Judith Avrahami & Werner Güth & Ralph Hertwig & Yaakov Kareev & Hironori Otsubo, 2010. "Learning (Not) To Yield: An Experimental Study of Evolving Ultimatum Game Behavior," Jena Economic Research Papers 2010-092, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Uschi Backes-Gellner & Donata Bessey & Kerstin Pull & Simone Tuor, 2008. "What Behavioural Economics Teaches Personnel Economics," Working Papers 0077, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Feltovich, Nick & Swierzbinski, Joe, 2011. "The role of strategic uncertainty in games: An experimental study of cheap talk and contracts in the Nash demand game," European Economic Review, Elsevier, vol. 55(4), pages 554-574, May.
- Tanja Hörtnagl & Rudolf Kerschbamer, 2014. "How the Value of Information Shapes the Value of Commitment Or: Why the Value of Commitment Does Not Vanish," Working Papers 2014-03, Faculty of Economics and Statistics, University of Innsbruck.
- Poulsen, Anders U. & Tan, Jonathan H.W., 2004. "Can Information Backfire? - Experimental Evidence from the Ultimatum Game," Working Papers 04-16, University of Aarhus, Aarhus School of Business, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Richter).
If references are entirely missing, you can add them using this form.