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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 04-16:
Can Information Backfire? - Experimental Evidence from the Ultimatum Game

Anders U. Poulsen () and Jonathan H.W. Tan ()

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 Proposersí, and increases Respondersí, 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.

Keywords: Information; information acquisition; value of information; Ultimatum game; fairness; self-serving fairness; (follow links to similar papers)

JEL-Codes: C70; D63; D80; (follow links to similar papers)

36 pages, December 10, 2004

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