Quantal Response Equilibria of Ultimatum Bargaining Games

This paper applies quantal response equilibrium (QRE) models (McKelvey and Palfrey, 1995, Games and Economic Behavior) to ultimatum bargaining games. When the strategy space is discrete, as the noise vanishes, the QRE of the normal-form representation converges to a Nash equilibrium in which an equilibrium o er is between 0 and a half of the pie while the QRE of the extensive-form representation converges to the perfect equilibrium in which the responder refuses to take o er 0 but accepts the smallest positive o er. When the strategy space is continuous, the QRE of both the normal-form and extensive-form converge to the perfect equilibrium, in which the proposer o ers 0 and the responder accepts any o er.