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Learning to bargain

  • Harbaugh, William T.
  • Krause, Kate
  • Vesterlund, Lise

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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Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 28 (2007)
Issue (Month): 1 (January)
Pages: 127-142

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Handle: RePEc:eee:joepsy:v:28:y:2007:i:1:p:127-142
Contact details of provider: Web page: http://www.elsevier.com/locate/joep

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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.
  2. Cameron, Lisa A, 1999. "Raising the Stakes in the Ultimatum Game: Experimental Evidence from Indonesia," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 47-59, January.
  3. Nick Feltovich & John Duffy, 1999. "Does observation of others affect learning in strategic environments? An experimental study," International Journal of Game Theory, Springer, vol. 28(1), pages 131-152.
  4. 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.
  5. Gregan-Paxton, Jennifer & John, Deborah Roedder, 1995. " Are Young Children Adaptive Decision Makers? A Study of Age Differences in Information Search Behavior," Journal of Consumer Research, University of Chicago Press, vol. 21(4), pages 567-80, March.
  6. W. Guth & R. Schmittberger & B. Schwartz, 2010. "An experimental analysis of ultimatum bargaining," Levine's Working Paper Archive 291, David K. Levine.
  7. John, Deborah Roedder, 1999. " Consumer Socialization of Children: A Retrospective Look at Twenty-Five Years of Research," Journal of Consumer Research, University of Chicago Press, vol. 26(3), pages 183-213, December.
  8. J.Keith Murnighan & MIchael Saxon, 1998. "Ultimatum bargaining by children and adults," Artefactual Field Experiments 00100, The Field Experiments Website.
  9. 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.
  10. 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.
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