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Satisficing in sales competition: experimental evidence

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  • Siegfried Berninghaus
  • Werner Güth
  • M. Vittoria Levati
  • Jianying Qiu

Abstract

In a duopoly market, aspiration levels express how much sellers want to earn given their expectations about the other's behavior. We augment the sellers' decision task by eliciting their profit aspiration. In a first experimental phase, whenever satisficing is not possible, sales choices, point beliefs, or aspiration levels have to be adapted. This allows us to investigate which of these three aspects individuals revise more often. In a second phase, testing the absorption of satisficing, participants are free to select non-satisficing sales profiles. The results reveal that most participants are satisficers who tend to adjust aspiration levels if they cannot be satisfied.

Suggested Citation

  • Siegfried Berninghaus & Werner Güth & M. Vittoria Levati & Jianying Qiu, 2009. "Satisficing in sales competition: experimental evidence," Working Papers 2009-14, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2009-14
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    References listed on IDEAS

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    Cited by:

    1. Güth, Werner & Vittoria Levati, M. & Ploner, Matteo, 2010. "Satisficing in strategic environments: A theoretical approach and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 554-561, October.
    2. Werner Güth, 2009. "Optimal gelaufen, einfach zufrieden oder unüberlegt gehandelt? Zur Theorie (un)eingeschränkt rationalen Entscheidens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 75-100, May.
    3. Werner Güth, 2007. "A Non-Bayesian Approach to (Un)Bounded Rationality," Jena Economics Research Papers 2007-035, Friedrich-Schiller-University Jena.
    4. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 412-438, December.

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    More about this item

    Keywords

    Satisficing behavior; Duopoly; Profit aspiration; Theory absorption;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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