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

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  • Lehmann-Waffenschmidt, Marco
  • Reina, Livia

Abstract

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.

Suggested Citation

  • Lehmann-Waffenschmidt, Marco & Reina, Livia, 2003. "Coalition formation in multilateral negotiations with a potential for logrolling: An experimental analysis of negotiators' cognition processes," Dresden Discussion Paper Series in Economics 17/03, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
  • Handle: RePEc:zbw:tuddps:1703
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    References listed on IDEAS

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    1. 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.
    2. Reina, Livia, 2003. "Negotiators' cognition: An experimental study on bilateral, integrative negotiation," Dresden Discussion Paper Series in Economics 05/03, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    3. Stratmann, Thomas, 1995. "Logrolling in the U.S. Congress," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 441-456, July.
    4. Selten, Reinhard, 1998. "Features of experimentally observed bounded rationality," European Economic Review, Elsevier, vol. 42(3-5), pages 413-436, May.
    5. Wilson, Robert, 1969. "An Axiomatic Model of Logrolling," American Economic Review, American Economic Association, vol. 59(3), pages 331-341, June.
    6. 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 365-384, October.
    7. Peter Bernholz, 1973. "Logrolling, arrow paradox and cyclical majorities," Public Choice, Springer, vol. 15(1), pages 87-95, June.
    8. Stratmann, Thomas, 1992. "The Effects of Logrolling on Congressional Voting," American Economic Review, American Economic Association, vol. 82(5), pages 1162-1176, December.
    9. 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.
    10. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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