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From ultimatum to Nash bargaining: Theory and experimental evidence

Published online by Cambridge University Press:  14 March 2025

Sven Fischer ,
Werner Güth ,
Wieland Müller  and
Andreas Stiehler
Sven Fischer*
Affiliation:
Institut für Wirtschaftstheorie und Operations Research, Universität Karlsruhe (TH), 78128 Karlsruhe, Germany
Werner Güth*
Affiliation:
Max Planck Institute for Research into Economic Systems, 07745 Jena, Germany
Wieland Müller*
Affiliation:
Department of Economics, Tilburg University, 5000LE Tilburg, The Netherlands
Andreas Stiehler
Affiliation:
Max Planck Institute for Research into Economic Systems, 07745 Jena, Germany
*
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
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Abstract

We consider a sequential two-party bargaining game with uncertain information transmission. When the first mover states her demand she does only know the probability with which the second mover will be informed about it. The informed second mover can either accept or reject the offer and payoffs are determined as in the ultimatum game. Otherwise the uninformed second mover states his own demand and payoffs are determined as in the Nash demand game. In the experiment we vary the commonly known probability of information transmission. Our main finding is that first movers’ and uninformed second movers’ demands adjust to this probability as qualitatively predicted, that is, first movers’ (uninformed second movers’) demands are lower (higher) the lower the probability of information transmission.

Keywords

CommitmentImperfect observabilityUltimatum bargainingNash bargainingExperiments

JEL classification

C78: Bargaining Theory • Matching Theory C92: Laboratory, Group Behavior C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 9 , Issue 1 , April 2006 , pp. 17 - 33
Copyright
Copyright © 2006 Economic Science Association

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