Premium
AN ALTERNATIVE APPROACH TO EXPLAINING BARGAINING BEHAVIOUR IN SIMPLE SEQUENTIAL GAMES
Author(s) -
Yang ChunLei,
Weimann Joachim,
Mitropoulos Atanasios
Publication year - 2006
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2006.00310.x
Subject(s) - simple (philosophy) , economics , stochastic game , mathematical economics , heuristic , bargaining power , class (philosophy) , microeconomics , test (biology) , econometrics , computer science , mathematics , mathematical optimization , artificial intelligence , philosophy , epistemology , paleontology , biology
. For simple sequential games, the payoff structure has certain bargaining power implication. Intuitively, certain actions may have the effect of the carrot and the stick as sanctioning means. Fair outcomes can be alternatively viewed as the consequence of their presence. Experimental data on various games are used to test the hypothesis of carrot and stick behaviour. We show that our stick and carrot heuristic neatly captures puzzling phenomena in a wide class of simple sequential games. The results support the view that punishing subjects are not worse off than myopic pay‐off maximizers as long as subjects are involved in a repeated strangers scheme.