On the Impact of an Intermediary Agent in the Ultimatum Game

Abstract

Delegating bargaining to an intermediary agent is common practice in many situations. The proposer, while not actively bargaining, sets constraints on the intermediary agent’s offer. We study ultimatum games where proposers delegate bargaining to an intermediary agent by setting boundaries on either end of the offer. We find that after accounting for censoring, intermediaries treat these boundaries similarly to a nonbinding proposer suggestion. Specifically, we benchmark on a nonbinding setting where the proposer simply states the offer they would like to have made. We find that specifying a constraint on the intermediary has the same effect as the benchmark suggestion once censoring is accounted for. That is, giving an agent a price ceiling or price floor is treated, by the agent, the same as expressing a direct price wish, as long as the constraint is not binding. We discuss the implications of these findings in terms of the importance of communication and the role of constraints in bargaining with intermediaries.

Keywords

• decisions for others
• game theory
• bargaining