Ultimatum Offers and the Role of Transparency:An Experimental Study of Information Acquisition

This paper analyses individual information acquisition in an ultimatum game with aprioriunknown outside options. We find that while individual play seems to accord reasonablywell with the distribution of empirical behavior, contestants seem to grossly overweighthe value of information. While information acquisition seems to be excessive in all of ourscenarios we identify a significant difference in behavior related to market transparency. Intransparent markets, when respondents can observe whether bidders have acquired information,acceptance rates are higher. Accordingly, information is more valuable in transparentmarkets, both individually and socially.