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Satisficing in sales competition: experimental evidence

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Author Info
Siegfried Berninghaus
Werner Güth
M. Vittoria Levati ()
Jianying Qiu ()

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Abstract

In a stochastic duopoly market, sellers must form state-specific aspirations expressing how much they want to earn given their expectations about the other's behavior. We define individually and mutually satisficing sales behavior for given individual beliefs and aspiration profiles. In a first experimental phase, whenever satis¯cing is not possible, beliefs or aspirations have to be adapted, or other strategy profiles must be found. In a second phase, participants are free to select non-satisficing sales profiles. The results reveal that most people are satisficers who, either mandatorily or deliberately, tend to adjust aspiration levels if they cannot be satisfied.

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Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2006-32.

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Length: 31 pages
Date of creation: Dec 2006
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Handle: RePEc:esi:discus:2006-32

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Related research
Keywords: Satisficing behavior; bounded rationality; duopoly;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection

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References listed on IDEAS
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.:
  1. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-65, October. [Downloadable!] (restricted)
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  2. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September. [Downloadable!] (restricted)
  3. Roy Radner, 1975. "A Behavioral Model of Cost Reduction," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 196-215, Spring. [Downloadable!] (restricted)
  4. Youngse Kim, 1999. "Satisficing and optimality in 2þ2 common interest games," Economic Theory, Springer, vol. 13(2), pages 365-375. [Downloadable!] (restricted)
  5. Lilly, Gregory, 1994. "Bounded rationality : A Simon-like explication," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 205-230, January. [Downloadable!] (restricted)
  6. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May. [Downloadable!] (restricted)
  7. Werner Güth & Gerlinde Fellner & Ev Martin, 2006. "Satisficing or Optimizing? - An Experimental Study," Papers on Strategic Interaction 2006-11, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  8. Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-25, June. [Downloadable!] (restricted)
  9. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April. [Downloadable!] (restricted)
  10. Aumann, Robert & Brandenburger, Adam, 1995. "Epistemic Conditions for Nash Equilibrium," Econometrica, Econometric Society, vol. 63(5), pages 1161-80, September. [Downloadable!] (restricted)
  11. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2006. "Is Satisficing Absorbable? - An Experimental Study," Papers on Strategic Interaction 2006-10, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  12. Gerlinde Fellner & Werner Güth & Boris Maciejovsky, 2005. "Satisficing in Financial Decision Making A Theoretical and Experimental Attempt to Explore Bounded Rationality," Papers on Strategic Interaction 2005-23, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Werner Güth, 2007. "A Non-Bayesian Approach to (Un)Bounded Rationality," Jena Economic Research Papers in Economics 2007-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek. [Downloadable!]
  2. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2008. "Belief Elicitation in Experiments: Is there a Hedging Problem?," IZA Discussion Papers 3517, Institute for the Study of Labor (IZA). [Downloadable!]
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