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Dissolving an ambiguous partnership

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  • Oechssler, Jörg
  • Roomets, Alex

Abstract

Two partners try to dissolve a partnership that owns an asset of ambiguous value, where the value is determined ex post by a draw from an Ellsberg urn. In a within-subject experiment, subjects make decisions in three different bargaining mechanisms: unstructured bargaining, the Texas shoot-out, and a K + 1 auction. We find that the K +1 auction is the most e¢ cient mechanism, which is in line with theory. Free format bargaining yields a surprising number of disagreements, which are not usually observed when the partnership has a certain or risky value.

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  • Oechssler, Jörg & Roomets, Alex, 2023. "Dissolving an ambiguous partnership," Working Papers 0733, University of Heidelberg, Department of Economics.
    • Handle: RePEc:awi:wpaper:0733
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    References listed on IDEAS

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    Keywords

    bargaining; ambiguity; experiment;
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