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Satisficing in sales competition: experimental evidence

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  • Siegfried Berninghaus

    ()

  • Werner G?th

    ()

  • M. Vittoria Levati

    ()

  • Jianying Qiu

    ()

Abstract

In a duopoly market, aspiration levels express how much sellers want to earn given their expectations about the other?s behavior. We augment the sellers? decision task by eliciting their profit aspiration. In a first experimental phase, whenever satisficing is not possible, sales choices, point beliefs, or aspiration levels have to be adapted. This allows us to investigate which of these three aspects individuals revise more often. In a second phase, testing the absorption of satisficing, participants are free to select non-satisficing sales profiles. The results reveal that most participants are satisficers who tend to adjust aspiration levels if they cannot be satisfied.

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Bibliographic Info

Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2009-14.

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Length: 41
Date of creation: May 2009
Date of revision:
Handle: RePEc:inn:wpaper:2009-14

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Keywords: Satisficing behavior; Duopoly; Profit aspiration; Theory absorption;

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References

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  1. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  2. Youngse Kim, 1999. "Satisficing and optimality in 2þ2 common interest games," Economic Theory, Springer, vol. 13(2), pages 365-375.
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  5. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April.
  6. 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.
  7. 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.
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Cited by:
  1. Werner Güth, 2009. "Optimal gelaufen, einfach zufrieden oder unüberlegt gehandelt? Zur Theorie (un)eingeschränkt rationalen Entscheidens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 75-100, 05.
  2. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer, vol. 13(4), pages 412-438, December.
  3. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2008. "Satisficing in strategic environments: a theoretical approach and experimental evidence," Jena Economic Research Papers 2008-078, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. Werner Güth, 2007. "A Non-Bayesian Approach to (Un)Bounded Rationality," Jena Economic Research Papers 2007-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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