Ultimatum bargaining behavior: A survey and comparison of experimental results

Werner Güth, and Reinhard Tietz (1990) “Ultimatum bargaining behavior:: A survey and comparison of experimental results." Journal of Economic Psychology, Volume 11, Issue 3, September 1990, Pages 417–449. DOI: http://dx.doi.org/10.1016/0167-4870(90)90021-Z. (PDF from EconPaper)

==notes by yinung==

==original Abstract==

In an ultimatum bargaining game players 1 and 2 can distribute a positive amount of money in the following way: first, player 1 determines his demand which player 2 can then either accept or induce conflict, i.e. player 2 faces the ultimatum either to accept player 1’s proposal or to have no agreement at all. Experimentally observed ultimatum bargaining decisions with amounts ranging from 0.50 to 100 German marks are statistically analysed. The demands of player 1 are compared with the acceptance behavior of player 2 with the help of consistency tests in which a subject has to decide in the position of both players. Finally, we consider ultimatum bargaining games with more than just one round where, except for the final round, nonacceptance does not cause conflict but another round of ultimatum bargaining for a smaller cake.

Selection Criteriain Coordination Games: Some Experimental Results

Russell W. Cooper, Douglas V. DeJong, Robert Forsythe, Thomas W. Ross (1990) “Selection Criteriain Coordination Games: Some Experimental Results." American Economic Review, Vol. 80, No. 1 (Mar., 1990), pp. 218-233.  (In JSTOR: Page Scan PDF Summary)

Abstract by yinung

This paper studies a class of symmetric, simultaneous move,  complete information games called coordination games which exhibit multiple Nash equilibria that are Pareto-rankable. Coordinationgames are at the heart of a numberof recent models in industrial organization macroeconomics. These include models of network externalities (Michael Katz and Carl Shapiro,1985), product warranties under bilateral moral hazard (Cooper-Ross,1985), team production (John Bryant, 1983); and macroeconomic models of imperfect competition. A number of selection criteriahave been proposed for games of this natureand these are reviewed. These criteria provide a number of hypotheses regarding equilibrium selection in coordination games.

…The goal of this experiment to address the following questions.First, is Nash equilibriuma good predictorof observed behavior in strategic or game settings? Second, when there are multiple Nash equilibria does one arise “naturally"as the outcome?

The main results … are summarized as follows. First, we find that the observed pattern of play is accurately predicted by the Nash equilibrium concept. Second, we find that the Pareto-dominant Nash equilibrium is not always the experimental outcome.


Pareto-dominant Nash:

selected References

  • Farrell, Joseph, “Cheap Talk, Coordination, and Entry," Rand Journal of Economics, Spring 1987, 18, 34-39.