Examining the impact of relative standing using an ultimatum bargaining game experiment

This paper presents the results of an experiment designed to examine the extent to which a decision-maker's relative standing affects bargaining behaviour. In each session, 14 participants played a series of one-shot ultimatum bargaining games. In one treatment, the participants were made aware of only their own cumulative outcome rank as they started each new game, while in a second treatment both their own rank and the rank of their bargaining partner was known. The results indicate relative standing does affect bargaining behaviour, particularly when the decision-maker knows both his own rank and the rank of the bargaining partner. A primary finding is that the provision of relative standing information can enhance well-being because it promotes the formation of mutually beneficial bargaining agreements.