An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game
AbstractWhen an economic exchange requires agreement by multiple independent parties, the potential exists for an individual to strategically delay agreement in an attempt to capture a greater share of the surplus created by the exchange. This ‘‘holdout problem’’ is a common feature of the land-assembly literature because development frequently requires the assembly of multiple parcels of land. We use experimental methods to examine holdout behavior in a laboratory bargaining game that involves multi-person groups, complementary exchanges, and holdout externalities. The results of six treatments that vary the bargaining institution, number of bargaining periods, and cost of delay demonstrate that holdout is common across institutions and is, on average, a payoff-improving strategy for responders. Both proposers and responders take a more aggressive initial bargaining stance in multi-period bargaining treatments relative to single-period treatments, but take a less aggressive bargaining stance when delay is costly. Nearly all exchanges eventually occur in our multi-period treatments, leading to higher overall efficiency relative to the single-period treatments, both with and without delay costs.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 76 (2009)
Issue (Month): 2 (October)
Other versions of this item:
- Kurtis Swope & Pamela Schmitt & John Cadigan & Robert Shupp, 2008. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Departmental Working Papers 21, United States Naval Academy Department of Economics.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- K1 - Law and Economics - - Basic Areas of Law
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hege, Ulrich, 2003. "Workouts, court-supervised reorganization and the choice between private and public debt," Journal of Corporate Finance, Elsevier, vol. 9(2), pages 233-269, March.
- Flavio Menezes & Rohan Pitchford, 2004. "A model of seller holdout," Economic Theory, Springer, vol. 24(2), pages 231-253, August.
- Ellingsen, Tore & Johannesson, Magnus, 2000.
"Is There a Hold-up Problem?,"
Working Paper Series in Economics and Finance
357, Stockholm School of Economics.
- Miller, Marcus & Thomas, Dania, 2006.
"Sovereign Debt Restructuring: the Judge, the Vultures and Creditor Rights,"
CEPR Discussion Papers
5710, C.E.P.R. Discussion Papers.
- Marcus Miller & Dania Thomas, 2007. "Sovereign Debt Restructuring: The Judge, the Vultures and Creditor Rights," The World Economy, Wiley Blackwell, vol. 30(10), pages 1491-1509, October.
- Miller, Marcus & Thomas, Dania, 2006. "Sovereign debt restructuring : the Judge, the vultures and creditor rights," The Warwick Economics Research Paper Series (TWERPS) 757, University of Warwick, Department of Economics.
- Tomomi Tanaka, 2005. "Resource allocation with spatial externalities: Experiments on land consolidation," Experimental 0511004, EconWPA.
- Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
- Houba, Harold & Bolt, Wilko, 2000. "Holdouts, backdating and wage negotiations," European Economic Review, Elsevier, vol. 44(9), pages 1783-1800, October.
- Tanaka Tomomi, 2007. "Resource Allocation with Spatial Externalities: Experiments on Land Consolidation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-33, January.
- Hermalin, Benjamin E, 1995. "An Economic Analysis of Takings," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 64-86, April.
- Peter Cramton & Joseph S. Tracy, 1992.
"Strikes and Holdouts in Wage Bargaining: Theory and Data,"
Papers of Peter Cramton
92aer, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
- Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
- Harrison, Glenn W, et al, 1987. "Coasian Solutions to the Externality Problem in Experimental Marke ts," Economic Journal, Royal Economic Society, vol. 97(386), pages 388-402, June.
- Thomas J. Miceli & Kathleen Segerson, 2007.
"A Bargaining Model of Holdouts and Takings,"
American Law and Economics Review,
Oxford University Press, vol. 9(1), pages 160-174.
- Brown, David T, 1989. "Claimholder Incentive Conflicts in Reorganization: The Role of Bankruptcy Law," Review of Financial Studies, Society for Financial Studies, vol. 2(1), pages 109-23.
- 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.
- Blume, Lawrence & Rubinfeld, Daniel L & Shapiro, Perry, 1984. "The Taking of Land: When Should Compensation Be Paid?," The Quarterly Journal of Economics, MIT Press, vol. 99(1), pages 71-92, February.
- Menezes, Flavio Marques & Pitchford, Rohan, 2001.
"The Land Assembly Problem Revisited,"
Economics Working Papers (Ensaios Economicos da EPGE)
427, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Ed Nosal, 2007. "Private takings," Working Paper 0713, Federal Reserve Bank of Cleveland.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Eckart, Wolfgang, 1985. "On the land assembly problem," Journal of Urban Economics, Elsevier, vol. 18(3), pages 364-378, November.
- Miceli, Thomas J. & Sirmans, C.F., 2007. "The holdout problem, urban sprawl, and eminent domain," Journal of Housing Economics, Elsevier, vol. 16(3-4), pages 309-319, November.
- Gu, Wulong & Kuhn, Peter, 1998. "A Theory of Holdouts in Wage Bargaining," American Economic Review, American Economic Association, vol. 88(3), pages 428-49, June.
- Gneezy, Uri & Haruvy, Ernan & Roth, Alvin E., 2003. "Bargaining under a deadline: evidence from the reverse ultimatum game," Games and Economic Behavior, Elsevier, vol. 45(2), pages 347-368, November.
- Datta, Sudip & Iskandar-Datta, Mai E, 1995. "Reorganization and Financial Distress: An Empirical Investigation," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 18(1), pages 15-32, Spring.
- Kurtis Swope & Pamela Schmitt & John Cadigan & Ryan Wielgus, 2010. "Contracts, Behavior, and the Land-Assembly Problem:An Experimental Study," Departmental Working Papers 29, United States Naval Academy Department of Economics.
- Anita Gantner & Rudolf Kerschbamer, 2013. "Fairness and Efficiency in a Subjective Claims Problem," Working Papers 2013-30, Faculty of Economics and Statistics, University of Innsbruck.
- Kurtis Swope & Pamela Schmitt & John Cadigan & Robert Shupp, 2009.
"The Holdout Problem and Urban Sprawl: Experimental Evidence,"
Departmental Working Papers
24, United States Naval Academy Department of Economics.
- Cadigan, John & Schmitt, Pamela & Shupp, Robert & Swope, Kurtis, 2011. "The holdout problem and urban sprawl: Experimental evidence," Journal of Urban Economics, Elsevier, vol. 69(1), pages 72-81, January.
- Usha Sridhar & Sridhar Mandyam, 2013. "A Group Utility Maximizer Mechanism for Land Assembly," The Journal of Real Estate Finance and Economics, Springer, vol. 47(3), pages 466-488, October.
- Parente, Michael D. & Winn, Abel M., 2012. "Bargaining behavior and the tragedy of the anticommons," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 475-490.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Razzolini).
If references are entirely missing, you can add them using this form.