Personal und Organisation

Ultimatum Games and Wages: Evidence of an "Implicit Bargain"?

In this paper, I argue that both ultimatum game outcomes and wages may be influenced by what the result of a bargain would have been: The players in the ultimatum game, just as the parties to the labor contract, seem to engage in what may be called an "implicit" or, in Selten's words, an "imaginary" bargain. In determining ultimatum game outcomes, assuming an implicit bargain can account for the experimental evidence on the role of responder bargaining power. Moreover, the implications of the implicit bargain for the wage setting process are compatible with the stylized facts of wage determination.
Keywords: ultimatum game, wage determination, Nash bargain
JEL-classification: J31, M12