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Estimating noncooperative and cooperative models of bargaining: an empirical comparison

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  • Masanori Mitsutsune
  • Takanori Adachi

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Abstract

This paper examines the issue of model selection in studies of strategic situations. In particular, we compare estimation results from a noncooperative formulation of government formulation à la (Baron and Ferejohn in Am Poli Sci Rev 87:34–47, 1989 ) with those from two alternative cooperative formulations (Nash in Econometrica 18:155–162, 1950 ; Shapley and Shubik in Am Poli Sci Rev 48:787–792, 1954 ). Although the estimates of the ministerial ranking are similar, statistical testing suggests that the noncooperative formulation is best fitted to the observed data among the alternative models. This result implies that modeling the noncooperative structure in bargaining situations is crucially important at the risk of possibly misspecifying the details of the game. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Masanori Mitsutsune & Takanori Adachi, 2014. "Estimating noncooperative and cooperative models of bargaining: an empirical comparison," Empirical Economics, Springer, vol. 47(2), pages 669-693, September.
  • Handle: RePEc:spr:empeco:v:47:y:2014:i:2:p:669-693
    DOI: 10.1007/s00181-013-0755-9
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
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    More about this item

    Keywords

    Model selection; Bargaining; Government formation ; Structural estimation; C52; C71; C72; C78; H19;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • H19 - Public Economics - - Structure and Scope of Government - - - Other

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