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:||May 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0) 115 951 5620
Fax: +44 (0) 115 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
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.:
- 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.
- R. J. Aumann & J. H. Dreze, 2009.
"Assessing Strategic Risk,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 1(1), pages 1-16, February.
- 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.
- 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.
- Rubinstein, Ariel, 1982.
"Perfect Equilibrium in a Bargaining Model,"
Econometric Society, vol. 50(1), pages 97-109, January.
- repec:cup:cbooks:9780521425230 is not listed on IDEAS
- 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.
- repec:cup:cbooks:9780521458672 is not listed on IDEAS
- Pankaj Ghemawat, 1997. "Games Businesses Play: Cases and Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071827, June.
- 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.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- 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.
- 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.
- 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.
- 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.
- 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.
- repec:cup:cbooks:9780521415019 is not listed on IDEAS
- 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.
When requesting a correction, please mention this item's handle: RePEc:cdx:dpaper: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: (Alex Possajennikov)
If references are entirely missing, you can add them using this form.