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Coalition formation in multilateral negotiations with a potential for logrolling: An experimental analysis of negotiators' cognition processes

  • Lehmann-Waffenschmidt, Marco
  • Reina, Livia
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    In the present study we analyse the topic of coalition formation in multi-issue multilateral negotiations under different voting rules when there is the opportunity of logrolling. We have carried out 3 experiments and compare our findings with the standard public choice theory predictions. In the first experiment we have shown that in a situation of 3-issues and 3-parties negotiations with majority rule, most of the subjects behave in a satisficing, not in a optimizing, way. They are found to be subject to a "Zone of Agreement Bias" (ZAB) which induces them to form suboptimal coalitions and to choose Pareto-dominated agreements. Moreover, we find that the cycling problem predicted by public choice theory in most cases does not arise. In experiment 2 we have shown that the adoption of the unanimity, instead of the majority, rule reduced the suboptimizing effect of the ZAB, and produced a much higher rate of optimal agreements. Experiment 3 shows that the results obtained in experiments 1 and 2 hold even when the level of complexity of the negotiation problem increases. To this aim we considered a situation of four-issues and four-parties negotiations under both the majority and the unanimity rule.

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    Paper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 17/03.

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    Date of creation: 2003
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    Handle: RePEc:zbw:tuddps:1703
    Contact details of provider: Postal: 01062 Dresden
    Phone: ++49 351 463 2196
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    Web page: http://www.tu-dresden.de/wiwi/
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    1. Reina, Livia, 2003. "Negotiators' cognition: An experimental study on bilateral, integrative negotiation," Dresden Discussion Paper Series in Economics 05/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
    2. Schotter Andrew & Weigelt Keith & Wilson Charles, 1994. "A Laboratory Investigation of Multiperson Rationality and Presentation Effects," Games and Economic Behavior, Elsevier, vol. 6(3), pages 445-468, May.
    3. Selten, Reinhard, 1998. "Features of experimentally observed bounded rationality," European Economic Review, Elsevier, vol. 42(3-5), pages 413-436, May.
    4. Stratmann, Thomas, 1995. "Logrolling in the U.S. Congress," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 441-56, July.
    5. Kau, James B & Rubin, Paul H, 1979. "Self-Interest, Ideology, and Logrolling in Congressional Voting," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 365-84, October.
    6. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages S251-78, October.
    7. Stratmann, Thomas, 1992. "The Effects of Logrolling on Congressional Voting," American Economic Review, American Economic Association, vol. 82(5), pages 1162-76, December.
    8. WILSON, Robert, . "An axiomatic model of logrolling," CORE Discussion Papers RP -39, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Peter Bernholz, 1973. "Logrolling, arrow paradox and cyclical majorities," Public Choice, Springer, vol. 15(1), pages 87-95, June.
    10. Teck-Hua Ho & Keith Weigelt, 1996. "Task Complexity, Equilibrium Selection, and Learning: An Experimental Study," Management Science, INFORMS, vol. 42(5), pages 659-679, May.
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