Seminar 8 April 2013

The Dynamics of Coalition Formation: a real-time multilateral bargaining experiment
 

Abstract

We experimentally investigate behavior in a repeated multilateral bargaining game. Subjects interact in groups of three, bargaining over the distribution of payments which occur at regular time intervals. During a given interval, payments occur if and only if a majority is in agreement about their allocation. The game ends after a prespecified surplus has been exhausted. Aside from these rules, we purposefully impose little structure on the bargaining process. Most importantly, we do not exogenously impose a sequence of moves (proposals and votes). Instead, all players may propose or agree to an allocation at any point in real time. We investigate the frequency and stability of different allocations. We find that most agreements involve minimum winning coalitions, with only two players receiving positive payoffs. The most frequent of these is an equal split among two players. However, the even two-way split accounts for less than half of all such agreements. The most stable agreement is the three-way equal split.

Contact: Associate Professor Battista Severgnini og Associate Professor Cédric Schneider