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An Alternative Approach To Explaining Bargaining Behaviour In Simple Sequential Games

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  • Chun‐Lei Yang
  • Joachim Weimann
  • Atanasios Mitropoulos

Abstract

. For simple sequential games, the payoff structure has certain bargaining power implication. Intuitively, certain actions may have the effect of the carrot and the stick as sanctioning means. Fair outcomes can be alternatively viewed as the consequence of their presence. Experimental data on various games are used to test the hypothesis of carrot and stick behaviour. We show that our stick and carrot heuristic neatly captures puzzling phenomena in a wide class of simple sequential games. The results support the view that punishing subjects are not worse off than myopic pay‐off maximizers as long as subjects are involved in a repeated strangers scheme.

Suggested Citation

  • Chun‐Lei Yang & Joachim Weimann & Atanasios Mitropoulos, 2006. "An Alternative Approach To Explaining Bargaining Behaviour In Simple Sequential Games," Pacific Economic Review, Wiley Blackwell, vol. 11(2), pages 201-221, June.
    • Handle: RePEc:bla:pacecr:v:11:y:2006:i:2:p:201-221
    DOI: 10.1111/j.1468-0106.2006.00310.x
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    References listed on IDEAS

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    1. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    2. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
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    Cited by:

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    2. Charness, Gary & Du, Ninghua & Yang, Chun-Lei, 2011. "Trust and trustworthiness reputations in an investment game," Games and Economic Behavior, Elsevier, vol. 72(2), pages 361-375, June.
    3. Brosig, Jeannette, 2006. "Communication channels and induced behavior," MPRA Paper 14035, University Library of Munich, Germany.

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