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Multilateral Bargaining with Proposer Selection Contest

Author

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  • Duk Gyoo Kim

    (Univ of Mannheim)

  • Sang-Hyun Kim

    (Yonsei Univ)

Abstract

This study investigates the competition to be selected as the proposer in a subsequent multilateral bargaining game experimentally. The experimental environment varies in two dimensions: reservation payoffs (homogeneous or heterogeneous) and information on the extent of each subject’s investment in the competition (public or private). The proposer’s share was significantly lower than what theory predicts, and with taking into account the proposer’s partial rent extraction, subjects over-invest to increase their chances of winning the right of proposal. More importantly, we find that inefficiency (due to the levels of spending) and inequality go hand in hand; the surplus was distributed most efficiently and most equally when the reservation payoffs were heterogeneous, and subjects were informed of who had spent how much in the competition. The proportion of proposals being rejected was smaller in public treatments than in private treatments. This study contributes to the literature by identifying formal rules that are more effective in establishing efficient informal norms.

Suggested Citation

  • Duk Gyoo Kim & Sang-Hyun Kim, 2020. "Multilateral Bargaining with Proposer Selection Contest," Working papers 2020rwp-168, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2020rwp-168
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    Cited by:

    1. Andrzej Baranski & Ernesto Reuben, 2023. "Competing for Proposal Rights: Theory and Experimental Evidence," Working Papers 20220085, New York University Abu Dhabi, Department of Social Science, revised Mar 2023.
    2. Kim, Chulyoung & Kim, Sang-Hyun & Lee, Jinhyuk & Lee, Joosung, 2022. "Strategic alliances in a veto game: An experimental study," European Journal of Political Economy, Elsevier, vol. 75(C).
    3. Chessa, Michela & Hanaki, Nobuyuki & Lardon, Aymeric & Yamada, Takashi, 2022. "The effect of choosing a proposer through a bidding procedure in implementing the Shapley value," Journal of Economic Psychology, Elsevier, vol. 93(C).
    4. Merkel, Anna & Vanberg, Christoph, 2023. "Multilateral bargaining with subjective claims under majority vs. unanimity rule: An experiment," Journal of Economic Psychology, Elsevier, vol. 95(C).

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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