Efficiency in Bargaining Games with Alternating Offers
AbstractBargaining games model situations in which the realization of potential benefits is jeopardized by conflicting bargaining powers. Most of the literature on bargaining behavior focuses on bargaining over gains. Exploration of behavior in situations under which agents bargain over losses has received only limited attention from the profession. An important question is whether the negative effect of competing bargaining powers on the efficiency of agreements is more severe in bargaining over gains or over losses. Another understudied research question is how the likelihood that the outcome of a negotiation will actually be implemented affects efficiency of bargaining. We design an experiment that addresses these two questions. We find that in alternating offers games, outcomes of bargaining over gains are more efficient than outcomes of bargaining over losses. We also find that the likelihood that an interaction is implemented has a positive effect on the efficiency of bargaining.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 3 ()
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Efficiency; Bargaining; Experiments; Payoff Protocols;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
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- James Andreoni & Emily Blanchard, 2006.
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- Binmore, K.G., 2007. "Does game theory work? The bargaining challenge," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Ken Binmore, 2007. "Does Game Theory Work? The Bargaining Challenge," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262026074, June.
- Jayson L. Lusk & M. Darren Hudson, 2010. "Bargaining Over Losses," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 12(01), pages 83-91.
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