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The dynamics of coalition formation – A multilateral bargaining experiment with free timing of moves

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  • Tremewan, James
  • Vanberg, Christoph

Abstract

We experimentally investigate behavior in a finitely repeated coalition formation game played in continuous time. Subjects interact in groups of three, bargaining over the distribution of payments which occur at regular time intervals. During a given interval, payments occur if and only if a majority is in agreement about their allocation. Aside from these rules, we purposefully impose little structure on the bargaining process. We investigate the frequency and stability of different types of agreements, as well as transitions between them. Two-thirds of payments involve divisions where one player receives nothing, almost half of which are equal splits of the entire surplus between two players. The most stable division is the three-way equal split. Transitions between agreements are frequent and are generally consistent with myopic payoff maximization, in the sense that subjects do not accept short-term losses. We also find that transitions between coalitions are not Markovian. In particular, players more often forgo short-term gains in order to remain in a coalition if it has proven stable in the past.

Suggested Citation

  • Tremewan, James & Vanberg, Christoph, 2016. "The dynamics of coalition formation – A multilateral bargaining experiment with free timing of moves," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 33-46.
  • Handle: RePEc:eee:jeborg:v:130:y:2016:i:c:p:33-46
    DOI: 10.1016/j.jebo.2016.07.011
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    Cited by:

    1. Li, Zhi & Zhang, Xin & Xu, Wenchao, 2018. "Water Transactions along a River: A Multilateral Bargaining Experiment with a Veto Player," 2018 Annual Meeting, August 5-7, Washington, D.C. 274048, Agricultural and Applied Economics Association.
    2. Wagner, Alexander K. & Granic, Dura-Georg, 2017. "Tie-Breaking Power in Committees," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168187, Verein für Socialpolitik / German Economic Association.
    3. Fehrler, Sebastian & Schneider, Maik T., 2019. "Buying Supermajorities in the Lab," IZA Discussion Papers 12477, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Multilateral bargaining; Group choice; Experiments; Continuous time; Cooperative game theory; Coalition formation;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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