Escalation Bargaining: Theoretical Analysis and Experimental Test
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.
|Date of creation:||13 May 2011|
|Contact details of provider:|| Postal: Jubilee Campus, Nottingham NG2 8BB|
Phone: +44-115-846 66 02
Fax: +44-115-846 66 67
Web page: http://www.nottingham.ac.uk/business/
More information through EDIRC
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.:
- R. J. Aumann & J. H. Dreze, 2009.
"Assessing Strategic Risk,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 1(1), pages 1-16, February.
- AUMANN, Robert J. & DREZE, Jacques H., "undated". "Assessing strategic risk," CORE Discussion Papers RP 2089, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- R. J. Aumann & J. H. Dreze, 2004. "Assessing Strategic Risk," Discussion Paper Series dp361, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- AUMANN, Robert J. & DREZE, Jacques H., 2005. "Assessing strategic risk," CORE Discussion Papers 2005020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- R.J., AUMANN & Jacques-Henri, DREZE, 2005. "Assessing Strategic Risk," Discussion Papers (ECON - Département des Sciences Economiques) 2005020, Université catholique de Louvain, Département des Sciences Economiques.
- Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
- Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
- Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
- 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, vol. 112(481), pages 679-703, July.
- 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.
- Brams, Steven J. & Kilgour, D. Marc, 1985. "Winding Down if Preemption or Escalation Occurs: A Game-Theoretic Analysis," Working Papers 85-30, C.V. Starr Center for Applied Economics, New York University.
- 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.
- Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, January.
- 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.
- Camerer, Colin F. & Weber, Roberto A., 1999. "The econometrics and behavioral economics of escalation of commitment: a re-examination of Staw and Hoang's NBA data," Journal of Economic Behavior & Organization, Elsevier, vol. 39(1), pages 59-82, May.
- 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 1043, California Institute of Technology, Division of the Humanities and Social Sciences.
- Pankaj Ghemawat, 1997. "Games Businesses Play: Cases and Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071827.
- 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.
- Fetherstonhaugh, David & Slovic, Paul & Johnson, Stephen & Friedrich, James, 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.
- Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230, January.
- 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.
- 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.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June. Full references (including those not matched with items on IDEAS)