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Learning to Bargain

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Author Info
William T. Harbaugh () (University of Oregon Economics Department)
Kate Krause () (University of New Mexico Economics Department)
Lise Vesterlund () (University of Pittsburgh Economics Department)

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Abstract

This paper studies how children learn to bargain. We performed simple anonymous bargaining experiments with real payoffs with 256 children from age 8 to 18. On average, offers by even the youngest children were close to optimal, given the responses. Both offers and responses were similar to the results that others have reported for adults. Younger children showed more variance in the size of proposals. Children showed clear evidence of reinforcement learning, responding to a rejection by increasing subsequent proposals. This pattern was strongest for the youngest children, who tended to over-react to rejections. We found mixed support for social cognitive theory: while proposals increased after other children made larger proposals, they did not increase after proposals by others were rejected.

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Publisher Info
Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2004-9.

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Length: 34
Date of creation: 01 Nov 2003
Date of revision: 01 Nov 2003
Handle: RePEc:ore:uoecwp:2004-9

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Postal: 1285 University of Oregon, 435 PLC, Eugene, OR 97403-1285
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Web page: http://economics.uoregon.edu/
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Related research
Keywords: bargaining learning children ultimatum game.

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Find related papers by JEL classification:
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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References listed on IDEAS
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  1. Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-95, December. [Downloadable!] (restricted)
  2. John Duffy & Nick Feltovich, 1997. "Does Observation of Others Affect Learning in Strategic Environments? An Experimental Study," Levine's Working Paper Archive 592, UCLA Department of Economics. [Downloadable!]
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  3. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. [Downloadable!] (restricted)
  4. William T. Harbaugh & Kate Krause & Steven G. Liday, 2002. "Bargaining by Children," University of Oregon Economics Department Working Papers 2002-04, University of Oregon Economics Department, revised 20 Jul 2002. [Downloadable!]
  5. Murnighan, J. Keith & Saxon, Michael Scott, 1998. "Ultimatum bargaining by children and adults," Journal of Economic Psychology, Elsevier, vol. 19(4), pages 415-445, August. [Downloadable!] (restricted)
  6. Robert Slonim & Alvin E. Roth, 1998. "Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic," Econometrica, Econometric Society, vol. 66(3), pages 569-596, May.
  7. J. Keith Murnighan & M.S. Saxon, 1998. "Ultimatum Bargaining by Children and Adults," Artefactual Field Experiments 0071, The Field Experiments Website. [Downloadable!]
  8. Cameron, Lisa A, 1999. "Raising the Stakes in the Ultimatum Game: Experimental Evidence from Indonesia," Economic Inquiry, Oxford University Press, vol. 37(1), pages 47-59, January.
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