Advanced Search
MyIDEAS: Login to save this paper or follow this series

Escalation Bargaining: Theoretical Analysis and Experimental Test

Contents:

Author Info

  • Swee-Hoon Chuah

    ()
    (Nottingham University Business School, University of Nottingham)

  • Robert Hoffmann

    ()
    (Nottingham University Business School, University of Nottingham)

  • Jeremy Larner

    ()
    (Nottingham University Business School, University of Nottingham)

Abstract

The standard chicken game is a popular model of certain important real scenarios but does not allow for the escalation behaviour these are typically associated with. This is problematic if the critical, final decisions in these scenarios are sensitive to previous escalation. We introduce and analyse, theoretically and by experiment, a new game which permits escalation behaviour. Compared with an equivalent chicken game, Pareto-suboptimal outcomes are significantly more frequent. This result is inconsistent with our rational choice analysis and possible psychological roots are explored.

Download Info

If 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.
File URL: http://www.nottingham.ac.uk/cedex/documents/papers/2011-05.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2011-05.

as in new window
Length:
Date of creation: May 2011
Date of revision:
Handle: RePEc:not:notcdx:2011-05

Contact details of provider:
Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
More information through EDIRC

Related research

Keywords: escalation; brinkmanship; chicken game; experiments;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Shaun Hargreaves-Heap & Yanis Varoufakis, 2002. "Some Experimental Evidence On The Evolution Of Discrimination, Co--Operation And Perceptions Of Fairness," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(481), pages 679-703, July.
  2. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  3. Engelmann, Dirk & Steiner, Jakub, 2007. "The effects of risk preferences in mixed-strategy equilibria of 2x2 games," Games and Economic Behavior, Elsevier, vol. 60(2), pages 381-388, August.
  4. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230, 9.
  5. Iñaki Rodriguez-Prieto & Esteban Fernández-Juricic & José Martín & Yohana Regis, 2009. "Antipredator behavior in blackbirds: habituation complements risk allocation," Behavioral Ecology, International Society for Behavioral Ecology, vol. 20(2), pages 371-377.
  6. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  7. Fetherstonhaugh, David, et al, 1997. "Insensitivity to the Value of Human Life: A Study of Psychophysical Numbing," Journal of Risk and Uncertainty, Springer, vol. 14(3), pages 283-300, May-June.
  8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  9. Pankaj Ghemawat, 1997. "Games Businesses Play: Cases and Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071827, December.
  10. AUMANN, Robert J. & DREZE, Jacques H., . "Assessing strategic risk," CORE Discussion Papers RP -2089, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, 9.
  12. Brams, Steven J. & Kilgour, D. Marc, 1985. "Winding Down if Preemption or Escalation Occurs: A Game-Theoretic Analysis," Working Papers, C.V. Starr Center for Applied Economics, New York University 85-30, C.V. Starr Center for Applied Economics, New York University.
  13. Goeree, Jacob K. & Holt, Charles A. & Palfrey, Thomas R., 2003. "Risk averse behavior in generalized matching pennies games," Games and Economic Behavior, Elsevier, vol. 45(1), pages 97-113, October.
  14. Camerer, Colin F. & Weber, Roberto A., 1998. "The Econometrics and Behavioral Economics of Escalation of Commitment: A Re-examination of Staw and Hoang's NBA Data," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 1043, California Institute of Technology, Division of the Humanities and Social Sciences.
  15. repec:cup:cbooks:9780521458672 is not listed on IDEAS
  16. Colin Camerer & Richard H. Thaler, 2003. "In Honor of Matthew Rabin: Winner of the John Bates Clark Medal," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 159-176, Summer.
  17. 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.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Fuhai HONG & Larry KARP, 2013. "International Environmental Agreements with Endogenous or Exogenous Risk," Economic Growth centre Working Paper Series, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre 1310, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:not:notcdx:2011-05. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Suzanne Robey).

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.