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Why do People Veto? An Experimental Analysis of the Valuation and the Consequences of Varying Degrees of Veto Power

  • Werner Güth
  • Judit Kóvaczs

By vetoing one questions mutually efficient agreements. On the other hand the threat of vetoing may prevent exploitation. Based on a generalization of ultimatum bargaining (Suleiman, 1996) we first elicit the responders' certainty equivalents for three different degrees of veto power. Afterwards the corresponding bargaining rule is implemented. The experimental data reveal that proposers are afraid of more veto power but that responders only care for commanding veto power at all, not for its strength.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-06/cesifo_wp308.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 308.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_308
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  1. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
  2. V. Prasnikar & A. Roth, 1998. "Considerations of fairness and strategy: experimental data from sequential games," Levine's Working Paper Archive 451, David K. Levine.
  3. Suleiman, Ramzi, 1996. "Expectations and fairness in a modified Ultimatum game," Journal of Economic Psychology, Elsevier, vol. 17(5), pages 531-554, November.
  4. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  5. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
  6. G. Bolton, 2010. "A comparative model of bargaining: theory and evidence," Levine's Working Paper Archive 263, David K. Levine.
  7. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December.
  8. Binmore, K. & Samuelson, L., 1993. "An Economist's Perspective on the Evolution of Norms," Working papers 9323, Wisconsin Madison - Social Systems.
  9. Bolle, Friedel, 1990. "High reward experiments without high expenditure for the experimenter?," Journal of Economic Psychology, Elsevier, vol. 11(2), pages 157-167, June.
  10. Georg Kirchsteiger, 1994. "The role of envy in ultimatum games," ULB Institutional Repository 2013/5925, ULB -- Universite Libre de Bruxelles.
  11. Frank, Bjorn, 1996. "The use of internal games: The case of addiction," Journal of Economic Psychology, Elsevier, vol. 17(5), pages 651-660, November.
  12. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
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