Hard Bargains and Lost Opportunities
AbstractA long tradition in economics assumes that any potential gains from trade will be exploited. This emphasis on efficiency clashes with the possibility that hard bargaining over the division of the surplus may cause some potential deals to be lost. The authors examine an Outside Option Game designed to study the tension between maximizing the size of the surplus and bargaining over the division of this surplus among those who contributed to its creation. An experimental study confirms that subjects often fail to achieve efficient outcomes. A theoretical model accounts for this behavior in terms of an equilibrium achieved in an imperfect world. Coauthors are Chris Proulx, Larry Samuelson, and Joe Swierzbinski.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 108 (1998)
Issue (Month): 450 (September)
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Feltovich, Nick & Swierzbinski, Joe, 2011. "The role of strategic uncertainty in games: An experimental study of cheap talk and contracts in the Nash demand game," European Economic Review, Elsevier, vol. 55(4), pages 554-574, May.
- Ellingsen, Tore & Robles, Jack, 2002.
"Does Evolution Solve the Hold-Up Problem?,"
Games and Economic Behavior,
Elsevier, vol. 39(1), pages 28-53, April.
- Tore Ellingsen & Jack Robles, 2000. "Does Evolution Solve the Hold-up Problem," Econometric Society World Congress 2000 Contributed Papers 1525, Econometric Society.
- Ellingsen, Tore & Robles, Jack, 2000. "Does Evolution Solve the Hold-up Problem?," Working Paper Series in Economics and Finance 358, Stockholm School of Economics.
- Andreoni, James & Samuelson, Larry, 2006.
"Building rational cooperation,"
Journal of Economic Theory,
Elsevier, vol. 127(1), pages 117-154, March.
- James Andreoni & Larry Samuelson, 2003. "Building Rational Cooperation," Levine's Working Paper Archive 506439000000000477, David K. Levine.
- Andreoni,J. & Samuelson,L., 2003. "Building rational cooperation," Working papers 4, Wisconsin Madison - Social Systems.
- Jim Andreoni & Larry Samuelson, 2003. "Building Rational Cooperation," NajEcon Working Paper Reviews 666156000000000068, www.najecon.org.
- Nejat Anbarci & Nick Feltovich, 2011.
"How sensitive are bargaining outcomes to changes in disagreement payoffs?,"
Development Research Unit Working Paper Series
36-11, Monash University, Department of Economics.
- Nejat Anbarci & Nick Feltovich, 2013. "How sensitive are bargaining outcomes to changes in disagreement payoffs?," Experimental Economics, Springer, vol. 16(4), pages 560-596, December.
- Dawid, Herbert & MacLeod, W. Bentley, 2008. "Hold-up and the evolution of investment and bargaining norms," Games and Economic Behavior, Elsevier, vol. 62(1), pages 26-52, January.
- repec:dgr:uvatin:2003099 is not listed on IDEAS
- Randolph Sloof, 2003. "Price-setting Power versus Private Information," Tinbergen Institute Discussion Papers 03-099/1, Tinbergen Institute.
- Feri, Francesco & Gantner, Anita, 2011. "Bargaining or searching for a better price? - An experimental study," Games and Economic Behavior, Elsevier, vol. 72(2), pages 376-399, June.
- Binmore,K. & McCarthy,J. & Ponti,G. & ..., 1999.
"A backward induction experiment,"
34, Wisconsin Madison - Social Systems.
- Andreozzi, Luciano, 2010. "An evolutionary theory of social justice: Choosing the right game," European Journal of Political Economy, Elsevier, vol. 26(3), pages 320-329, September.
- Troger, Thomas, 2002. "Double Auctions, Ex-Post Participation Constraints, and the Hold-Up Problem," University of California at Santa Barbara, Economics Working Paper Series qt5qv060md, Department of Economics, UC Santa Barbara.
- Tore Ellingsen & Magnus Johannesson, 2004.
"Is There a Hold-up Problem?,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 106(3), pages 475-494, October.
- Troger, Thomas, 2002. "Double Auctions, Ex-Post Participation Constraints, and the Hold-Up Problem," University of California at Santa Barbara, Economics Working Paper Series qt3f2509gz, Department of Economics, UC Santa Barbara.
- Carpenter, Jeffrey & Rudisill, McAndrew, 2003. "Fairness, escalation, deference, and spite: strategies used in labor-management bargaining experiments with outside options," Labour Economics, Elsevier, vol. 10(4), pages 427-442, August.
- Troger, Thomas, 2002. "Why Sunk Costs Matter for Bargaining Outcomes: An Evolutionary Approach," Journal of Economic Theory, Elsevier, vol. 102(2), pages 375-402, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.