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Blindfolded vs. Informed Ultimatum Bargaining – A Theoretical and Experimental Analysis

Author

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  • Güth Werner

    (Libera Università Internazionale degli Studi Sociali (LUISS) Max Planck Institute for Collective Goods,Roma, Italy)

  • Pull Kerstin

    (School of Business and Economics, University of Tübingen,Tübingen, Germany)

  • Stadler Manfred

    (School of Business and Economics, University of Tübingen,Tübingen, Germany)

  • Zaby Alexandra K.

    (School of Business and Economics, University of Tübingen,Tübingen, Germany)

Abstract

This paper analyzes blindfolded vs. informed ultimatum bargaining where proposer and responder are both either uninformed or informed about the size of the pie. Considering the transition from one information setting to another suggests that more information induces lower (higher) price offers and acceptance thresholds when the pie is small (large). While our experimental data confirm this transition effect, risk aversion leads to diverging results in blindfolded ultimatum bargaining where task-independent strategies such as ‘equal sharing’ or the ‘golden mean’ are implemented more frequently.

Suggested Citation

  • Güth Werner & Pull Kerstin & Stadler Manfred & Zaby Alexandra K., 2017. "Blindfolded vs. Informed Ultimatum Bargaining – A Theoretical and Experimental Analysis," German Economic Review, De Gruyter, vol. 18(4), pages 444-467, December.
    • Handle: RePEc:bpj:germec:v:18:y:2017:i:4:p:444-467
    DOI: 10.1111/geer.12112
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    Cited by:

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    3. Federica Alberti & Werner Güth & Kei Tsutsui, 2020. "Experimental effects of institutionalizing co-determination by a procedurally fair bidding rule," Working Papers in Economics & Finance 2020-10, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.

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    More about this item

    Keywords

    Ultimatum bargaining; information structure; experimental economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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