The Ultimatum Game
Anyone who has taken a negotiating course or read "The Wisdom of Crowds" knows of the ultimatum game. In this game, there are two people, one of whom receives $10 to split between the two of them. This person makes a take-it or leave-it offer to the other person. If the other person accepts the offer, each person receives his part of the $10; if the other person rejects the offer, they both lose. In a perfectly logical world, the other person would always accept the offer, no matter how small, because he would be receiving free money.
Buying domains from their owners is an interesting example of the ultimatum game in real life. (It's not exactly the same, but pretty close). Existing domains are useful to people other than their owners for a variety of reasons - potentially easier to SEO, there may be some brand value (e.g. "good" names), the domains have existing traffic due to links to them on the net, etc.
Suppose that you make an offer to someone to buy their domain, and suppose that this domain is generating no revenue for that person or they are about to let it go for other reasons (they have no further use for it - company went out of business, changed names, etc.) In either case, the recipient of your offer, in the absence of any other better offers, would accept your proposal, since it would be free money for them. (There would be some intangible cost to the recipient, since they would need to invest the time to receive the money and transfer the domain to you.)
From personal experience I can tell you that all such recipients do not accept the offer. Why is this? I suspect it is because the same holds true in the real world as in the ultimatum game: the recipients of the offers don't want to feel like the buyers are getting too good a deal. Instead, these owners would rather let their domains go.
Buying domains from their owners is an interesting example of the ultimatum game in real life. (It's not exactly the same, but pretty close). Existing domains are useful to people other than their owners for a variety of reasons - potentially easier to SEO, there may be some brand value (e.g. "good" names), the domains have existing traffic due to links to them on the net, etc.
Suppose that you make an offer to someone to buy their domain, and suppose that this domain is generating no revenue for that person or they are about to let it go for other reasons (they have no further use for it - company went out of business, changed names, etc.) In either case, the recipient of your offer, in the absence of any other better offers, would accept your proposal, since it would be free money for them. (There would be some intangible cost to the recipient, since they would need to invest the time to receive the money and transfer the domain to you.)
From personal experience I can tell you that all such recipients do not accept the offer. Why is this? I suspect it is because the same holds true in the real world as in the ultimatum game: the recipients of the offers don't want to feel like the buyers are getting too good a deal. Instead, these owners would rather let their domains go.
2 Comments:
Great site loved it alot, will come back and visit again.
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i understand what you are saying about this.. just its that in the ultimatum game the person who makes the decision about whatever's being offered isn't the person who has the choice to decline the offer or not.
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