Ultimatum Offers and the Role of Transparency: An Experimental Study of Information Acquisition
AbstractThis paper analyses individual information acquisition in an ultimatum game with a-priori unknown outside options. We find that while individual play seems to accord reasonably well with the distribution of empirical behavior, contestants seem to grossly overweigh the value of information. While information acquisition seems to be excessive in all of our scenarios we identify a significant difference in behavior related to market transparency. In transparent markets, when respondents can observe whether bidders have acquired information, acceptance rates are higher. Accordingly, information is more valuable in transparent markets, both individually and socially.
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 2003-16.
Length: 21 pages
Date of creation: Jun 2003
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-10-12 (All new papers)
- NEP-COM-2003-10-12 (Industrial Competition)
- NEP-EXP-2003-10-12 (Experimental Economics)
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.:
- Werner Güth & Radosveta Ivanova-Stenzel & Manfred Königstein & Martin Strobel, 2002. "Bid Functions in Auctions and Fair Division Games: Experimental Evidence," German Economic Review, Verein für Socialpolitik, vol. 3(4), pages 461-484, November.
- Grossman, Sanford J & Stiglitz, Joseph E, 1976. "Information and Competitive Price Systems," American Economic Review, American Economic Association, vol. 66(2), pages 246-53, May.
- Sanford J Grossman & Joseph E Stiglitz, 1997.
"On the Impossibility of Informationally Efficient Markets,"
Levine's Working Paper Archive
1908, David K. Levine.
- Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, vol. 70(3), pages 393-408, June.
- Harrison, Glenn W & McCabe, Kevin A, 1996. "Expectations and Fairness in a Simple Bargaining Experiment," International Journal of Game Theory, Springer, vol. 25(3), pages 303-27.
- Judit Kovacs & Werner Güth, . "Effective equity experiences from an ultimatum experiment," Papers on Strategic Interaction 2005-04, Max Planck Institute of Economics, Strategic Interaction Group.
- repec:kap:expeco:v:10:y:2007:i:4:p:391-409 is not listed on IDEAS
- Werner Güth & René Levínský & Tobias Uske & Thomas Gehrig, 2006. "I want to know: Willingness to pay for unconditional veto power," Papers on Strategic Interaction 2006-21, Max Planck Institute of Economics, Strategic Interaction Group.
- Conrads, Julian & Irlenbusch, Bernd, 2011. "Strategic Ignorance in Bargaining," IZA Discussion Papers 6087, Institute for the Study of Labor (IZA).
- 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.