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Group Decision-Making in Ultimatum Bargaining: An Experimental Study

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  • Alexander Elbittar
  • Andrei Gomberg
  • Laura Sour

Abstract

Many rent-sharing decisions in a society are result from a bargaining process between groups of individuals (such as between the executive and the legislative branches of government, between legislative factions, between corporate management and shareholders, etc.). The purpose of this work is to conduct a laboratory study of the effect of different voting procedures on group decision-making in the context of ultimatum bargaining. An earlier study (Bornstein and Yaniv, [2]) has suggested that when the bargaining game is played by unstructured groups of agents, rather than by individuals, the division of the payoff is substantially affected in favor of the ultimatum-proposers. Our theoretical arguments suggest that one explanation for this could be implicit voting rules within groups. We propose to explicitly structure the group decision-making as voting and study the impact of different voting rules on the bargaining outcome.
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Suggested Citation

  • Alexander Elbittar & Andrei Gomberg & Laura Sour, 2004. "Group Decision-Making in Ultimatum Bargaining: An Experimental Study," Levine's Working Paper Archive 122247000000000267, David K. Levine.
  • Handle: RePEc:cla:levarc:122247000000000267
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    References listed on IDEAS

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    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
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    14. Kennan, John & Wilson, Robert, 1993. "Bargaining with Private Information," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 45-104, March.
    15. Ronald Bosman & Heike Hennig-Schmidt & Frans vanWinden, 2002. "Exploring Group Behavior in a Power-to-Take Video Experiment," Bonn Econ Discussion Papers bgse7_2002, University of Bonn, Germany, revised May 2002.
    16. Kagel, John H. & Kim, Chung & Moser, Donald, 1996. "Fairness in Ultimatum Games with Asymmetric Information and Asymmetric Payoffs," Games and Economic Behavior, Elsevier, vol. 13(1), pages 100-110, March.
    17. Robert, Christopher & Carnevale, Peter J., 1997. "Group Choice in Ultimatum Bargaining," Organizational Behavior and Human Decision Processes, Elsevier, vol. 72(2), pages 256-279, November.
    18. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
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    Cited by:

    1. Philip Bond & Hülya Eraslan, 2010. "Strategic Voting over Strategic Proposals," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 459-490.
    2. Alexander Elbittar & Andrei Gomberg, 2012. ""My friends: it would be an error to accept": Communication and group identity in a bargaining setting," Working Papers 1203, Centro de Investigacion Economica, ITAM.
    3. Müller, Wieland & Tan, Fangfang, 2013. "Who acts more like a game theorist? Group and individual play in a sequential market game and the effect of the time horizon," Games and Economic Behavior, Elsevier, vol. 82(C), pages 658-674.
    4. Philip Bond & Hülya Eraslan, 2004. "Strategic Voting over Strategic Proposals, Second Version," PIER Working Paper Archive 07-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 02 Jan 2007.

    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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