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Bargaining Outcomes as the Result of Coordinated Expectations

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  • Jeffrey P. Carpenter

    (Middlebury College)

Abstract

Experimental studies of two-person sequential bargaining demonstrate that the concept of subgame perfection is not a reliable predictor of actual behavior. Alternative explanations argue that fairness influences outcomes and that bargainer expectations matter and are likely not to be coordinated at the outset. This study examines the process by which bargainers in dyads coordinate their expectations on a bargaining convention and how this convention is supported by the seemingly empty threat of rejecting positive but small subgame perfect offers. To organize the data from this experiment, a Markov model of adaptive expectations and bounded rationality is developed. The model predicts actual behavior quite closely.

Suggested Citation

  • Jeffrey P. Carpenter, 2003. "Bargaining Outcomes as the Result of Coordinated Expectations," Journal of Conflict Resolution, Peace Science Society (International), vol. 47(2), pages 119-139, April.
    • Handle: RePEc:sae:jocore:v:47:y:2003:i:2:p:119-139
    DOI: 10.1177/0022002702251023
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    References listed on IDEAS

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    Cited by:

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    2. Daniel Druckman & James A. Wall, 2017. "A Treasure Trove of Insights," Journal of Conflict Resolution, Peace Science Society (International), vol. 61(9), pages 1898-1924, October.
    3. Cardella, Eric, 2012. "Learning to make better strategic decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 382-392.
    4. Maas, Victor S. & Yin, Huaxiang, 2022. "Finding partners in crime? How transparency about managers’ behavior affects employee collusion," Accounting, Organizations and Society, Elsevier, vol. 96(C).
    5. Esteban F. Klor & Sebastian Kube & Eyal Winter & Ro'i Zultan, 2011. "Can Higher Bonuses Lead to Less E ort? Incentive Reversal in Teams," Levine's Working Paper Archive 786969000000000073, David K. Levine.
    6. Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro’i, 2014. "Can higher rewards lead to less effort? Incentive reversal in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 72-83.
    7. Bendoly, Elliot & van Wezel, Wout & Bachrach, Daniel G. (ed.), 2015. "The Handbook of Behavioral Operations Management: Social and Psychological Dynamics in Production and Service Settings," OUP Catalogue, Oxford University Press, number 9780199357222.
    8. Normann, Hans-Theo & Rau, Holger A., 2014. "Simultaneous and sequential contributions to step-level public goods: One vs. two provision levels," DICE Discussion Papers 135, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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