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Satisficing in sales competition: experimental evidence

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Author Info
Siegfried Berninghaus ()
Werner Güth ()
M. Vittoria Levati ()
Jianying Qiu ()

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Abstract

In a duopoly market, aspiration levels express how much sellers want to earn given their expectations about the other’s behavior. We augment the sellers’ decision task by eliciting their profit aspiration. In a first experimental phase, whenever satisficing is not possible, sales choices, point beliefs, or aspiration levels have to be adapted. This allows us to investigate which of these three aspects individuals revise more often. In a second phase, testing the absorption of satisficing, participants are free to select non-satisficing sales profiles. The results reveal that most participants are satisficers who tend to adjust aspiration levels if they cannot be satisfied.

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Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2009-14.

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Length: 41
Date of creation: May 2009
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Handle: RePEc:inn:wpaper:2009-14

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Related research
Keywords: Satisficing behavior; Duopoly; Profit aspiration; Theory absorption;

Other versions of this item:

Find related papers by JEL classification:
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Werner Güth & Gerlinde Fellner & Ev Martin, 2006. "Satisficing or Optimizing? - An Experimental Study," Papers on Strategic Interaction 2006-11, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
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  7. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April. [Downloadable!] (restricted)
  8. Youngse Kim, 1999. "Satisficing and optimality in 2þ2 common interest games," Economic Theory, Springer, vol. 13(2), pages 365-375. [Downloadable!] (restricted)
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  12. Lilly, Gregory, 1994. "Bounded rationality : A Simon-like explication," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 205-230, January. [Downloadable!] (restricted)
  13. Gerlinde Fellner & Werner Güth & Boris Maciejovsky, 2005. "Satisficing in Financial Decision Making A Theoretical and Experimental Attempt to Explore Bounded Rationality," Papers on Strategic Interaction 2005-23, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Werner Güth, 2007. "A Non-Bayesian Approach to (Un)Bounded Rationality," Jena Economic Research Papers in Economics 2007-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek. [Downloadable!]
  2. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2008. "Belief Elicitation in Experiments: Is there a Hedging Problem?," IZA Discussion Papers 3517, Institute for the Study of Labor (IZA). [Downloadable!]
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