Strategic Uncertainty Aversion in Bargaining - Experimental Evidence∗
Strategic Uncertainty Aversion in Bargaining - Experimental Evidence∗ Ben Greiner† February 21, 2020 Abstract In a series of four experiments I demonstrate the existence of significant aversion to basically non-existent strategic uncertainty in very simple bargaining games. This aversion goes far beyond ordinary risk or ambiguity aversion. Specifically, although almost nobody expects or chooses the rejection of an offered equal split in a bargaining game, participants behave as if there would be a considerably large rejection rate for equal splits. This behavior is robust across experimental designs and subject pools, can lead to inefficiencies in markets, and is incompatible with consistency of strategies and rational beliefs. Keywords: strategic risk, strategic uncertainty, ultimatum game, dictator game, impunity game, bounded rationality JEL Classification: C72, C92, D3 ∗I would like to thank Gary Bolton, Ido Erev, Gigi Foster, Werner G¨uth, Muriel Niederle, Axel Ockenfels, Michael Peters, Carlos Pimienta, Al Roth, Patrick Schneider, Ro’i Zultan, participants at the ESA Meetings 2004 in Erfurt, 2009 in Tucson, and 2010 in Copenhagen; participants at the TIBER workshop 2010 in Tilburg, and the UNSW Behavioral Economics Workshop 2012; and participants at seminars at ANU, Deakin U, Harvard U, Humboldt U, U Canterbury, U Cologne, U Jena, UNSW Sydney, U Queensland, U South Australia, for the discussions and valuable comments. I am grateful to Bettina Bartels, Susanne B¨uchner, Ren´eCyranek, Xavier del Pozo, H˚akan Fink, Sven Fischer, Ralica Gospodinova, Martin Jonas, Felix Lamouroux, Katinka Pantz, Karin Ru¨etz, Carsten Schmidt, and Thomas Wolfgarten for their support for the experiments. †Wirtschaftsuniversit¨at Wien, Institute for Markets and Strategy, Welthandelsplatz 1, 1020 Vienna, Austria, e-mail: bgreiner AT wu.ac.at, and University of New South Wales, School of Economics.
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