Abstract
Ever since Camerer and Weigelt (1988) concluded in their important experimental work that “sequential equilibrium describes actual behavior well enough,” we might be tempted to use this theory confidently in various domains. To assess the robustness of the above conclusion, the present study attempts to explore Bayesian updating in a bilateral negotiated sale setup injected with a whiff of an ultimatum aroma. We conclude that the ultimatum nature of the basic game tends to overwhelm rational behavior on the part of the sellers and that buyers are not cognizant of favorable prices occurring later in the game.
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References
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Lee, C.C., Weg, E., Zwick, R. (2005). Failure of Bayesian Updating in Repeated Bilateral Bargaining. In: Rapoport, A., Zwick, R. (eds) Experimental Business Research. Springer, Boston, MA. https://doi.org/10.1007/0-387-24243-0_13
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DOI: https://doi.org/10.1007/0-387-24243-0_13
Publisher Name: Springer, Boston, MA
Print ISBN: 978-0-387-24214-9
Online ISBN: 978-0-387-24243-9
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