Ultimatum Offers and the Role of Transparency: An Experimental Study of Information Acquisition
This paper analyses individual information acquisition in an ultimatum game with a-priori unknown outside options. We find that while individual play seems to accord reasonably well with the distribution of empirical behavior, contestants seem to grossly overweigh the value of information. While information acquisition seems to be excessive in all of our scenarios we identify a significant difference in behavior related to market transparency. In transparent markets, when respondents can observe whether bidders have acquired information, acceptance rates are higher. Accordingly, information is more valuable in transparent markets, both individually and socially.
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- Grossman, Sanford J & Stiglitz, Joseph E, 1980.
"On the Impossibility of Informationally Efficient Markets,"
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American Economic Association, vol. 70(3), pages 393-408, June.
- Sanford J Grossman & Joseph E Stiglitz, 1997. "On the Impossibility of Informationally Efficient Markets," Levine's Working Paper Archive 1908, David K. Levine.
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- Harrison, Glenn W & McCabe, Kevin A, 1996. "Expectations and Fairness in a Simple Bargaining Experiment," International Journal of Game Theory, Springer, vol. 25(3), pages 303-27.
- Grossman, Sanford J & Stiglitz, Joseph E, 1976. "Information and Competitive Price Systems," American Economic Review, American Economic Association, vol. 66(2), pages 246-53, May.
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