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

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  • Werner Güth
  • Judit Kóvaczs

Abstract

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.

Suggested Citation

  • Werner Güth & Judit Kóvaczs, 2000. "Why do People Veto? An Experimental Analysis of the Valuation and the Consequences of Varying Degrees of Veto Power," CESifo Working Paper Series 308, CESifo.
    • Handle: RePEc:ces:ceswps:_308
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    References listed on IDEAS

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    1. Werner Güth & Radosveta Ivanova‐Stenzel & Sigve Tjotta, 2004. "Please, Marry Me! An Experimental Study of Risking a Joint Venture," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 1-21, February.

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