Examining the impact of relative standing using an ultimatum bargaining game experiment
by Muqun Li, Mark Pingle
Global Business and Economics Review (GBER), Vol. 9, No. 2/3, 2007

Abstract: This paper presents the results of an experiment designed to examine the extent to which a decision-maker's relative standing affects bargaining behaviour. In each session, 14 participants played a series of one-shot ultimatum bargaining games. In one treatment, the participants were made aware of only their own cumulative outcome rank as they started each new game, while in a second treatment both their own rank and the rank of their bargaining partner was known. The results indicate relative standing does affect bargaining behaviour, particularly when the decision-maker knows both his own rank and the rank of the bargaining partner. A primary finding is that the provision of relative standing information can enhance well-being because it promotes the formation of mutually beneficial bargaining agreements.

Online publication date: Tue, 22-May-2007

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