Average Offer Size With and Without Responder Competition
Experimental data reveals that introducing competition among responders leads to significantly lower offers from proposers. In one study, the average accepted offer in a standard one-responder ultimatum game was 43% of the total pie, but this figure dropped to just 26% in a game with two competing responders.
0
1
Tags
Library Science
Economics
Economy
Social Science
Empirical Science
Science
CORE Econ
Introduction to Microeconomics Course
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
Related
Figure 4.20: Rejection Rates in Ultimatum Games with and without Responder Competition
Average Offer Size With and Without Responder Competition
Analysis of Economic Decision-Making Under Competition
Consider two variations of a bargaining experiment where a Proposer offers to split a sum of money. In the first setup, there is a single Responder who can accept or reject the offer. In the second setup, two Responders compete; the first to accept the Proposer's offer gets the money. If a Proposer makes a low, unequal offer in both setups, how would the introduction of a competing Responder likely change the outcome?
The Effect of Competition on Bargaining Behavior
In a one-to-one 'take-it-or-leave-it' bargaining scenario, the person receiving the offer holds power because they can veto an unfair deal, forcing the proposer to make a more equitable offer to avoid getting nothing. The introduction of a second, competing recipient for the same offer fundamentally erodes this veto power.
Evaluating the Impact of Competition on Bargaining Power
In a bargaining game, a 'Proposer' offers a split of a sum of money to a 'Responder'. If the Responder accepts, the money is split as proposed; if they reject, neither party receives anything. Match each variation or principle of this game to its most likely corresponding description.
A 'Proposer' is deciding how to split a sum of money in a one-time interaction. In which of the following scenarios should the Proposer, acting to maximize their own share, logically make the lowest offer to the other party/parties?
Analyzing Responder Behavior Under Competition
An experiment is conducted where a 'Proposer' offers to split $10. The Proposer consistently offers $2 to the other participant(s), keeping $8. The experiment is run under two different conditions, and the results for the 'Responders' who receive the offer are recorded in the table below.
Condition Percentage of Responders Accepting the $2 Offer A: One Proposer, One Responder 58% B: One Proposer, Two Competing Responders 90% Based on this data, what is the most logical conclusion about the effect of competition among Responders?
In a bargaining scenario, a single 'Responder' is offered a small, unequal share of a prize by a 'Proposer.' The Responder might reject this offer out of a sense of fairness, even if it means neither party gets anything. Now, imagine the same low offer is made, but there are two Responders, and the first one to accept gets the share. What is the most accurate explanation for why a Responder in this competitive situation is far more likely to accept the low offer?
Learn After
Smartphone Market Dynamics
A small business is looking to hire one graphic designer for a project-based role. After posting the job, they receive applications from 15 highly skilled and equally qualified freelancers. According to the economic principle demonstrated by games with responder competition, what is the most probable effect this large applicant pool will have on the business's initial payment offer?
Art Auction Dynamics
A single company is seeking bids from multiple construction firms for a new project. This situation is likely to result in the company receiving lower bids than if it had negotiated with only one firm.
A single company is seeking bids from multiple construction firms for a new project. This situation is likely to result in the company receiving lower bids than if it had negotiated with only one firm.
Freelance Bidding Strategy Analysis
In a negotiation where one party makes a single, final offer, the offer is often substantial. However, if the offering party can make the same offer to several competing parties simultaneously, with the first to accept securing the deal, the initial offer tends to be significantly lower. Which statement best analyzes the underlying economic reason for this shift?
A city government needs to hire a company for a major public works project. A council member argues, 'We should negotiate exclusively with one pre-selected, reputable firm. This will ensure a high-quality outcome and a fair price. Opening the project to competitive bidding will just create a race to the bottom on price and quality.' Which statement provides the most accurate economic evaluation of the council member's claim about pricing?
Explaining the Power of Responder Competition
University Fellowship Negotiation Strategy