(Un)Reliable Concessions in Static and Dynamic Bargaining Experiments

Sven Fischer (), Luis G. Gonzalez and Werner Güth ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: A two-persons bargaining problem often consists of initially incompatible demands that can be unilaterally reduced by sequential concessions. In a 2 x 2 x 2 - factorial design we distinguish between reliable and unreliable concessions, between a static and dynamic settings and between symmetric and asymmetric initial demands. Whereas reliable concessions change the threat point, unreliable concessions do not. In the dynamic setting each player's concession can be conditional on the previous history of play; in the static setting a player's concessions for all bargaining trials are determined at the beginning of the game. In all situations conflict is triggered if neither gives in, or if a maximum number of trials is reached without a feasible agreement. Although our results indicate that conflict is more likely if concessions are reliable, the overall effciency of both institutions is similar.

Keywords: concession bargaining; behavioral economics (search for similar items in EconPapers)
Pages: 39 pages
Date: 2005-12
New Economics Papers: this item is included in nep-exp, nep-gth and nep-knm
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