•I examine how other-regarding preferences aggregate in a free-form bargaining experiment.•I find that bargainers retain equal payoffs when they transfer payoffs to third subjects.•The same subjects ...vary the transfers to third subjects considerably depending on their bargaining partner.•The formal analysis can link the results to the individual preferences of the bargainers.•Assuming pairwise inequality aversion explains 80% of the variance of the bargaining agreements.
Other-regarding preferences are powerful drivers of human behavior, leading individuals to forgo their own economic gains to share with others. However, when subjects with different levels of other-regarding concern bargain about how to distribute payoffs, it is unclear whether joint bargaining decisions reflect their individual preferences. In this free-form bargaining experiment, I examine how other-regarding preferences of two subjects interact and influence negotiated distribution decisions when they allocate payoffs between themselves and a powerless third subject. The data reveals that fairness between the bargainers is more important than fairness towards the third subject; bargainers only allocate payoff shares to third subjects if the other bargainer is willing to allocate the same amount, even if their other-regarding preferences differ strongly from each other when revealed individually. Through the formal analysis, I can link the results to the other-regarding preferences elicited individually and, thereby, provide new insights into the interaction of other-regarding preferences in joint decision-making environments.
▶ An experiment shows the existence of bargaining costs. ▶ Bargaining costs are sub-additive and subjects prefer to pool many bargains into one. ▶ Face to face bargaining is more costly than ...anonymous bargaining. ▶ The results suggest that mechanisms differ in their costs of use.
A mechanism with low direct cost of use may be preferred to alternatives implementing more efficient allocations. We show this experimentally by giving pairs of subjects the option to agree on a single average price for a sequence of trades—in effect pooling several small bargains into a larger one. We make pooling costly by tying it to some inefficient trades, but subjects nevertheless reveal strong tendencies to pool, particularly when more bargains remain to be struck and when bargaining is face to face. The results suggest that implementation costs could play a significant role in the use of many common trading practices.
We study matching and coalition formation environments allowing complementarities and peer effects. Agents have preferences over coalitions, and these preferences vary with an underlying, and ...commonly known, state of nature. Assuming that there is substantial variability of preferences across states of nature, we show that there exists a core stable coalition structure in every state if and only if agents' preferences are pairwise-aligned in every state. This implies that there is a stable coalition structure if agents' preferences are generated by Nash bargaining over coalitional outputs. We further show that all stability-inducing rules for sharing outputs can be represented by a profile of agents' bargaining functions and that agents match assortatively with respect to these bargaining functions. This framework allows us to show how complementarities and peer effects overturn well known comparative statics of many-to-one matching.
Rules help guide our behavior-particularly in complex social contexts. But rules sometimes give us the "wrong" answer. How do we know when it is okay to break the rules? In this paper, we argue that ...we sometimes use contractualist (agreement-based) mechanisms to determine when a rule can be broken. Our model draws on a theory of social interactions - "virtual bargaining" - that assumes that actors engage in a simulated bargaining process when navigating the social world. We present experimental data which suggests that rule-breaking decisions are sometimes driven by virtual bargaining and show that these data cannot be explained by more traditional rule-based or outcome-based approaches.Rules help guide our behavior-particularly in complex social contexts. But rules sometimes give us the "wrong" answer. How do we know when it is okay to break the rules? In this paper, we argue that we sometimes use contractualist (agreement-based) mechanisms to determine when a rule can be broken. Our model draws on a theory of social interactions - "virtual bargaining" - that assumes that actors engage in a simulated bargaining process when navigating the social world. We present experimental data which suggests that rule-breaking decisions are sometimes driven by virtual bargaining and show that these data cannot be explained by more traditional rule-based or outcome-based approaches.
We study sequential bargaining between a proposer and a veto player. Both have single‐peaked preferences, but the proposer is uncertain about the veto player's ideal point. The proposer cannot commit ...to future proposals. When players are patient, there can be equilibria with Coasian dynamics: the veto player's private information can largely nullify proposer's bargaining power. Our main result, however, is that under some conditions there also are equilibria in which the proposer obtains the high payoff that he would with commitment power. The driving force is that the veto player's single‐peaked preferences give the proposer an option to “leapfrog,” that is, to secure agreement from only low‐surplus types early on to credibly extract surplus from high types later. Methodologically, we exploit the connection between sequential bargaining and static mechanism design.
While there is a strong overlap between membership in employers’ associations and collective bargaining coverage, the overlap is far from being perfect. Using unique firm-level data from Germany, ...this study estimates the determinants of the membership in employers’ associations and the coverage by industry-level or firm-level agreements. The analysis particularly focuses on the various constellations of membership and collective bargaining status. The results show that firm-level worker representation, foreign ownership, work organization, firm size, age and East–West differences are important determinants. Altogether, the analysis demonstrates that a more differentiated picture of industrial relations can be obtained by considering both membership in employers’ associations and collective bargaining coverage.
Future network is envisioned to be a multi-service network which can support more than one distinct communications service type over the same physical infrastructure. As a potential game changer, ...wireless network virtualization (WNV) allows the coexistence of multiple network slices over a shared physical platform. One key advantage of WNV is to effectively support multiple traffic types in a multi-service network. In this paper, we propose a novel resource allocation scheme for future wireless networks. Our proposed scheme is formulated as a joint control paradigm, which consists of upper and lower control stages. In the upper control stage, the ideas of Kalai and Smorodinsky bargaining solution (KSBS) and Banzhaf value (BV) are combined to allocate the resource to virtual networks. In the lower control stage, each virtual network operator distributes its assigned resource into corresponding mobile devices based on the multi-criteria bargaining solution, which combines the Nash bargaining solution (NBS) and KSBS to optimize the overall performance subject to different service requirements. To effectively share the limited physical resource, each stage control mechanism works together in an interactive manner. The main novelty of our approach is to reach a reciprocal consensus among competitive network agents. Through system simulations, numerical results show the superiority of our proposed control approach. Especially, the proposed scheme increases the system throughput, device payoff, and fairness by about 10%, 10% and 15%, respectively, in comparison with existing state-of-the-art WNV protocols. Finally, we highlight interesting research challenges and point out potential directions to spur further research in this promising research area.
Take-it or leave-it offers are probably as old as mankind. Our objective here is, first, to provide a, probably subjectively colored, recollection of the initial ultimatum game experiment, its ...motivation and the immediate responses. Second, we discuss extensions of the standard ultimatum bargaining game in a unified framework, and, third, we offer a survey of the experimental ultimatum bargaining literature containing papers published since the turn of the century. The paper argues that the ultimatum game is a versatile tool for research in bargaining and on social preferences. Finally, we provide examples for open research questions and directions for future studies.
This paper investigates computationally when and how the order of move matters in a Conversational War of Attrition (Meyer-ter-Vehn et al., 2018). Switching the first mover flips the debate’s outcome ...for certain type-realizations and triggers two potentially opposing forces on jurors’ ex-ante expected costs. In the finite-horizon version of the game, a last-proposal advantage prevails if the jurors’ bias dominates their impatience, and a first-proposal advantage prevails if impatience dominates bias. In the infinite-horizon version, there is an unambiguous first-proposal advantage. These mechanisms are reminiscent of the Rubinstein (1982) sequential bargaining game.
•Switching the first mover may flip the outcome of a Conversational War of Attrition.•Impatience causes ex-ante a first-proposal advantage.•In a finite debate, an additional force favors the last proposal.•In a finite debate, the first-proposal advantage prevails if impatience dominates bias.•The mechanisms are similar to the Rubinstein sequential bargaining game.
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