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I want to know: Willingness to pay for unconditional veto power

  • Werner Güth

    ()

  • René Levínský
  • Tobias Uske

    ()

  • Thomas Gehrig

In the Yes/No game, like in the ultimatum game, proposer and responder can share a monetary reward. In both games the proposer suggests a reward distribution which the responder can accept or reject (yielding 0-payoffs). The games only differ in that the responder does (not) learn the suggested reward distribution in the Ultimatum (Yes/No) game. Although an opportunistic responder would always accept and therefore should not be willing to pay for knowing the proposal, earlier results (Güth, Levati, Ockenfels, and Weiland, 2005) show that offers in the Yes/No game are less generous and that responders, on average, earn less in the Yes/No game. By experimentally eliciting the willingness to pay for learning the proposal, we investigate whether these effects are adequately anticipated or whether they are overstated, as observed in an earlier related study (Gehrig, Güth, Levinsky, 2003).

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Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2006-21.

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Length: 21 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:esi:discus:2006-21
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  1. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
  2. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
  3. Carsten Schmidt & Matthias Sutter & Werner Güth, 2005. "Bargaining Outside the Lab - A Newspaper Experiment of a Three-Person Ultimatum Game," Papers on Strategic Interaction 2006-04, Max Planck Institute of Economics, Strategic Interaction Group.
  4. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  5. Gehrig, Thomas & Guth, Werner & Levati, Vittoria & Levinsky, Rene & Ockenfels, Axel & Uske, Tobias & Weiland, Torsten, 2007. "Buying a pig in a poke: An experimental study of unconditional veto power," Journal of Economic Psychology, Elsevier, vol. 28(6), pages 692-703, December.
  6. 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.
  7. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  8. Thomas Gehrig & Werner Güth & René Levínský, 2003. "Ultimatum Offers and the Role of Transparency: An Experimental Study of Information Acquisition," Papers on Strategic Interaction 2003-16, Max Planck Institute of Economics, Strategic Interaction Group.
  9. Sayman, Serdar & Onculer, Ayse, 2005. "Effects of study design characteristics on the WTA-WTP disparity: A meta analytical framework," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 289-312, April.
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