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Blindfolded vs. informed ultimatum bargaining: A theoretical and experimental analysis

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  • Güth, Werner
  • Pull, Kerstin
  • Stadler, Manfred
  • Zaby, Alexandra

Abstract

This paper analyzes blindfolded versus informed ultimatum bargaining where proposer and responder are both either uninformed or informed about the size of the pie. Analyzing the transition from one information setting to the other 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 due to task-independent strategies such as 'equal sharing' or the 'golden mean.' The probability of successful bargaining is lower in case of blindfolded than informed ultimatum bargaining.

Suggested Citation

  • Güth, Werner & Pull, Kerstin & Stadler, Manfred & Zaby, Alexandra, 2016. "Blindfolded vs. informed ultimatum bargaining: A theoretical and experimental analysis," University of Tübingen Working Papers in Business and Economics 90, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    • Handle: RePEc:zbw:tuewef:90
    DOI: 10.15496/publikation-10884
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    Cited by:

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    2. 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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