How Game Rules Shape Bargaining Power in the Ultimatum Game
In the ultimatum game, the rules governing the interaction determine the players' bargaining power and their resulting payoffs. The Proposer's ability to make a 'take-it-or-leave-it' offer grants them significant power, typically allowing them to secure more than half of the pie. This power is constrained by the Responder's ability to refuse the offer. However, this balance shifts when the rules change; for instance, adding a second Responder weakens the power of refusal and thereby increases the Proposer's bargaining power.
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Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
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Consider two distinct one-time bargaining situations involving a Proposer and a Responder who must agree on how to split $100.
Situation 1: The Proposer makes a take-it-or-leave-it offer. If the Responder accepts, they split the money as proposed. If the Responder rejects, both get nothing.
Situation 2: The Proposer dictates the split, and the Responder automatically receives their share with no ability to reject the offer.
How does the change in rules from Situation 1 to Situation 2 affect the relative bargaining power of the Proposer and the likely outcome?
Impact of Competition on Bargaining Outcomes
Consider three different one-time bargaining scenarios over a sum of $100. Arrange these scenarios in order from the one that gives the Proposer the MOST bargaining power to the one that gives the Proposer the LEAST bargaining power.
Analyzing the Impact of a Modified Rejection Payoff
Evaluating Rule Structures for Equitable Bargaining
In a strategic interaction where one person (the Proposer) offers to split a sum of money with another person (the Responder), match each modification to the rules with its most likely effect on the balance of bargaining power.
True or False: Consider a one-time bargaining situation where a Proposer offers a split of $100 to a Responder. If the rule is changed from 'a rejection means both players get $0' to 'a rejection means the Responder gets $10 and the Proposer gets $0', this change in rules decreases the Responder's bargaining power.
In a one-time bargaining interaction, a Proposer offers to split $100 with a single Responder. If the Responder rejects the offer, both individuals receive nothing. If the rules are changed so that the Proposer makes an offer to two Responders simultaneously, and the split is finalized with the first Responder to accept, the introduction of this competition is expected to cause the average offer amount accepted by a Responder to ________.
Analyzing the Impact of an Outside Option on Bargaining Power
A research institute is studying how different rule structures affect negotiation outcomes. They set up four different scenarios for a Proposer to split a $100 prize with a Responder. In which of the following scenarios does the Proposer have the most structural power, making a highly unequal split (e.g., the Proposer keeping almost everything) the most probable outcome?
How Game Rules Shape Bargaining Power in the Ultimatum Game
Impact of a Responder's Outside Option on Ultimatum Game Outcomes
Learn After
In a two-person negotiation over a sum of money, one person (the Proposer) makes a single 'take-it-or-leave-it' offer on how to split the sum. The second person (the Responder) can either accept the offer, and the money is split as proposed, or reject it, in which case neither person receives anything. Now, consider a change to this structure: there is still only one Proposer, but there are now two Responders. The Proposer makes an offer, and the first Responder to accept it gets the proposed share. Based on an analysis of the players' incentives, how does this change most likely affect the balance of bargaining power?
Analyzing a Change in Negotiation Rules
Evaluating Bargaining Power Under Different Negotiation Rules
In a one-time negotiation where one person proposes a split of $100 and the other can only accept or reject it (with rejection meaning both get nothing), the proposer's bargaining power is absolute because the responder will logically accept any offer greater than zero.
Analyzing Power Dynamics in a 'Take-It-Or-Leave-It' Negotiation
In a negotiation over a $100 prize, one person (the Proposer) makes a single 'take-it-or-leave-it' offer to a second person (the Responder). If the Responder accepts, the prize is split as proposed. In the standard version, if the Responder rejects the offer, both get $0. Consider a modification to this rule: if the Responder rejects the offer, the Proposer gets $0, but the Responder receives a fixed payment of $10. How does this modification affect the balance of bargaining power?
In a negotiation over a fixed sum of money, a 'Proposer' makes a single offer on how to divide it, and a 'Responder' reacts. Match each variation of this negotiation's rules to the most likely shift in bargaining power.
Analyzing a Negotiation Outcome
Modifying Negotiation Rules to Shift Power
In a negotiation over a $100 prize, a single Responder can accept an offer from one of two Proposers. Both Proposers simultaneously make a 'take-it-or-leave-it' offer. The Responder can see both offers and choose to accept one, in which case the prize is split as proposed with that Proposer. If the Responder rejects both offers, no one receives any money. How does this rule structure, compared to a standard single-Proposer negotiation, most likely affect the distribution of bargaining power?
The Take-it-or-Leave-it Rule and Proposer's Bargaining Power
Responder's Veto Power as a Limit on Proposer's Bargaining Power
Responder Competition Increases Proposer's Bargaining Power
In a one-time negotiation where one person proposes a split of $100 and the other can only accept or reject it (with rejection meaning both get nothing), the proposer's bargaining power is absolute because the responder will logically accept any offer greater than zero.