Quantal-response equilibrium models of the ultimatum bargaining game

This paper investigates the implications of normaland extensive-form quantal response equilibrium (QRE) models (McKelvey and Palfrey, 1995, Games and Economic Behavior; 1998, Experimental Economics) in the ultimatum bargaining game, assuming that players maximize expected monetary payo ̄ s. It is shown that normal-form QRE can select a non-sequential equilibrium, and that the selection depends crucially on the noise structure. The normal-form QRE describes the main qualitative features of experimental subjects' behavior better than extensiveform QRE even in experiments with extensive-form games. Journal of Economic Literature Classi± cation Number: C79, C92