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Information acquisition in the ultimatum game: An experimental study

Abstract

We experimentally investigate if free information disadvantages a player relative to when information is unavailable. We study an Ultimatum game where the Proposer, before making an offer, can obtain free information about the Responder's minimum acceptable offer. Theoretically, the Proposer should obtain the information and play a best reply to the Responder's minimum acceptable offer. Thus the Responder should get the largest share of the surplus. We find that an increasing number of Proposers become informed over time. Moreover, the proportion of Proposers who use the information to maximize money earnings increases over time. The majority of information-acquiring Proposers, however, refuse to offer more than one-half and play a best reply only to Responders who accept offers of one-half or less. This, together with a substantial proportion of Proposers who choose to remain uninformed, means that the availability of free information backfires for Proposers only by a little.

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Correspondence to Anders U. Poulsen.

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JEL Classification C70, D63, D80

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Poulsen, A.U., Tan, J.H.W. Information acquisition in the ultimatum game: An experimental study. Exp Econ 10, 391–409 (2007). https://doi.org/10.1007/s10683-006-9143-z

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  • DOI: https://doi.org/10.1007/s10683-006-9143-z

Keywords

  • Information acquisition
  • Ultimatum game
  • Fairness
  • Inequity aversion