ANALYSIS TOOLS OF POSITIONAL INVESTMENTS AND THE ULTIMATUM GAME
Petr Mach, Jan Pokorný, Radim Valenčík
Pages: 166-180
Published: 23 Oct 2023
DOI: 10.62991/EB1996198501
Views: 448
Downloads: 43
Abstract: This paper deals with the analysis of players' decision-making, using tools describing the role of positional investing. It discusses the differences between predicted and empirically observed decision- making in the ultimate game (UG). Empirically observed behavior has its rational basis in evaluating the bargaining position of future conflicts. We extend Nash's bargaining problem with a positional neutrality function. The positional neutrality function identifies an area of possible agreement in which one player's position in future games is not improved at the expense of the other. We used this analytical tool in a pilot UG experiment with 64 participants. We study the player's reactions in the experiment after adding additional information on future investment possibilities. Findings from the seven-rounded UG experiment support the predictive ability of positional neutrality functions. Hence, we assume that the “notion of fairness” can be explained as the “notion of positional neutral pay-off division.”
Keywords: nash bargaining problem, game theory, ultimatum game, positional investment neutrality function
Cite this article: Petr Mach, Jan Pokorný, Radim Valenčík. ANALYSIS TOOLS OF POSITIONAL INVESTMENTS AND THE ULTIMATUM GAME. Journal of International Scientific Publications: Economy & Business 17, 166-180 (2023). https://doi.org/10.62991/EB1996198501
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