Ultimatum bargaining over losses and gains – An experimental comparison |
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| Institution: | 1. Otto-von-Guericke-University Magdeburg, Chair in Empirical Economics, Postbox 4120, D-39016 Magdeburg, Germany;2. Otto-von-Guericke-University Magdeburg, Chair in Empirical Economics and Health Economics, Postbox 4120, D-39016 Magdeburg, Germany;1. Weill Cornell Medicine, Cornell University, United States;2. Department of Brain and Cognitive Sciences, University of Rochester, United States;3. Department of Psychology, Cornell University, United States;1. University of Hamburg, School of Business, Economics and Social Sciences, Department of Economics, Von-Melle-Park 5, 20146 Hamburg, Germany;2. National Institute for Health and Welfare, Centre for Health and Social Economics, Finland;3. School of Economics and Centre for Behavioral and Experimental Social Science, University of East Anglia, Norwich NR4 7TJ, United Kingdom;1. Department of Economics, University of Heidelberg, Bergheimer Str. 58, 69115 Heidelberg, Germany;2. Department of Economics, University of Heidelberg, Bergheimer Str. 20, 69115 Heidelberg, Germany;1. Helen Wills Neuroscience Institute, University of California, Berkeley, 175 Li Ka Shing Center, Berkeley, CA 94720, USA;2. Haas School of Business, University of California, Berkeley, 2220 Piedmont Avenue, Berkeley, CA 94720, USA;3. Virginia Tech Carilion Research Institute, 2 Riverside Circle, Roanoke, VA 24016, USA;4. Department of Neurology, University of California, San Francisco, 500 Parnassus Avenue, San Francisco, CA 94143, USA;5. Department of Neurology, VA Northern California Health Care System, 150 Muir Road, Martinez, CA 94553, USA |
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| Abstract: | Subjects in the loss domain tend to split payoffs equally when bargaining. The ultimatum game offers an ideal mechanism through which social scientists can investigate whether equal splits are the consequence of the proposers’ generosity or due to their anticipation that the responders will reject lower offers. This paper experimentally compares ultimatum bargaining that takes place in a loss domain with that under a gains domain. The results reveal that, although responders do not expect more in the loss domain, proposers do make higher offers. As such, proposers reach agreements more often in the loss domain than they do in the gains domain, and responders receive higher payoffs. |
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| Keywords: | Ultimatum bargaining Losses Equal split Experimental economics |
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