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An Experimental Analysis of Asymmetric Power in Conflict Bargaining

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  • Katri Sieberg

    ()
    (School of Social Science and Humanities, FIN-33014 University of Tampere, Finland)

  • David Clark

    ()
    (Department of Political Science, Binghamton University (SUNY), Binghamton, NY 13902, USA)

  • Charles A. Holt

    ()
    (Department of Economics, University of Virginia. Charlottesville, VA 22904, USA)

  • Timothy Nordstrom

    ()
    (Department of Political Science, The University of Mississippi, Oxford, MS 38677, USA)

  • William Reed

    ()
    (Department of Government & Politics, University of Maryland, 3140 Tydings Hall, College Park, MD 20742, USA)

Abstract

Demands and concessions in a multi-stage bargaining process are shaped by the probabilities that each side will prevail in an impasse. Standard game-theoretic predictions are quite sharp: demands are pushed to the precipice with nothing left on the table, but there is no conflict regardless of the degree of power asymmetry. Indeed, there is no delay in reaching an agreement that incorporates the (unrealized) costs of delay and conflict. A laboratory experiment has been used to investigate the effects of power asymmetries on conflict rates in a two-stage bargaining game that is (if necessary) followed by conflict with a random outcome. Observed demands at each stage are significantly correlated with power, as measured by the probability of winning in the event of disagreement. Demand patterns, however, are flatter than theoretical predictions, and conflict occurs in a significant proportion of the interactions, regardless of the degree of the power asymmetry. To address these deviations from the standard game-theoretic predictions, we also estimated a logit quantal response model, which generated the qualitative patterns that are observed in the data. This one-parameter generalization of the Nash equilibrium permits a deconstruction of the strategic incentives that cause demands to be less responsive to power asymmetries than Nash predictions.

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Bibliographic Info

Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 4 (2013)
Issue (Month): 3 (August)
Pages: 375-397

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Handle: RePEc:gam:jgames:v:4:y:2013:i:3:p:375-397:d:27697

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Related research

Keywords: bargaining; conflict; quantal response equilibrium; laboratory experiments;

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References

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  1. Binmore, Ken & McCarthy, John & Ponti, Giovanni & Samuelson, Larry & Shaked, Avner, 2002. "A Backward Induction Experiment," Journal of Economic Theory, Elsevier, vol. 104(1), pages 48-88, May.
  2. Powell, Robert, 1996. "Bargaining in the Shadow of Power," Games and Economic Behavior, Elsevier, vol. 15(2), pages 255-289, August.
  3. Jacob K. Goeree & Charles A. Holt, . "Asymmetric Inequality Aversion and Noisy Behavior in Alternating-Offer Bargaining Games," Virginia Economics Online Papers 329, University of Virginia, Department of Economics.
  4. Neelin, Janet & Sonnenschein, Hugo & Spiegel, Matthew, 1988. "A Further Test of Noncooperative Bargaining Theory: Comment," American Economic Review, American Economic Association, vol. 78(4), pages 824-36, September.
  5. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
  6. Cohen, Michele & Jaffray, Jean-Yves & Said, Tanios, 1987. "Experimental comparison of individual behavior under risk and under uncertainty for gains and for losses," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(1), pages 1-22, February.
  7. Binmore, Ken G & Shaked, Avner & Sutton, John, 1988. "A Further Test of Noncooperative Bargaining Theory: Reply," American Economic Review, American Economic Association, vol. 78(4), pages 837-39, September.
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