Effect of reduced opportunities on bargaining outcomes: an experiment with status asymmetries

Subrato Banerjee

Theory and Decision, 2020, vol. 89, issue 3, No 3, 313-346

Abstract: Abstract Several allocation rules (such as the Kalai–Smorodinsky solution) allow for possible violations of the ‘independence of irrelevant alternatives’ (IIA) axiom in cooperative bargaining game theory. Nonetheless, there is no conclusive evidence on how contractions of feasible sets exactly affect bargaining outcomes. We have been able to identify a definite behavioral channel through which such contractions actually determine the outcomes of negotiated bargaining. We find that the direction and the extent of changes in bargaining outcomes, due to contraction of the feasible set, respond to the level of (given) agent asymmetry with a remarkable degree of regularity. Alongside, we conclude that the validity of the IIA axiom is only limited to symmetric games.

Keywords: Experimental bargaining; Agent asymmetry; Contraction axiom (search for similar items in EconPapers)
JEL-codes: C71 C78 C90 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11238-020-09754-4

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