Publication details for Prof Jason ShachatShachat, J. & Swarthout, J.T. (2013). Auctioning the Right to Play Ultimatum Games and the Impact on Equilibrium Selection. Games 4(4): 738-753.
- Publication type: Journal Article
- ISSN/ISBN: 2073-4336
- DOI: 10.3390/g4040738
- Keywords: Ultimatum bargaining, Auction, Forward induction, Loss avoidance.
- Further publication details on publisher web site
- Durham Research Online (DRO) - may include full text
Author(s) from Durham
We auction scarce rights to play the Proposer and Responder positions in ultimatum games. As a control treatment, we randomly allocate these rights and charge exogenous participation fees. These participation fee sequences match the auction price sequence from a session of the original treatment. With endogenous selection via auctions, we find that play converges to a session-specific Nash equilibrium, and auction prices emerge supporting this equilibrium by the principle of forward induction. With random assignment, we find play also converges to a session-specific Nash equilibrium as predicted by the principle of loss avoidance. While Nash equilibria with low offers are observed, the subgame perfect Nash equilibrium never is.