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Can Information Backfire? - Experimental Evidence from the Ultimatum Game

Author

Listed:
  • Poulsen, Anders U.

    (Department of Economics, Aarhus School of Business)

  • Tan, Jonathan H.W.

    (Institute of Microeconomics, European University Viadrina)

Abstract
We investigate experimentally if an option to obtain free information can disadvantage a player, relative to when information is unavailable. In the Ultimatum game, the Responder chooses a minimum acceptable offer and the Proposer decides at the same time whether to obtain and use information about the minimum acceptable offer. We find that the option of using free information on average reduces Proposers’, and increases Responders’, payoff, but by less than predicted. This is due to the presence of Proposers who either refuse information or who use it in a self-servingly fair manner. Information changes the distribution of the surplus, and increases inefficiency.

Suggested Citation

  • Poulsen, Anders U. & Tan, Jonathan H.W., 2004. "Can Information Backfire? - Experimental Evidence from the Ultimatum Game," Working Papers 04-16, University of Aarhus, Aarhus School of Business, Department of Economics.
    • Handle: RePEc:hhs:aareco:2004_016
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    File URL: http://www.hha.dk/nat/wper/04-16_aup.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Information; information acquisition; value of information; Ultimatum game; fairness; self-serving fairness;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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