Enhancing honesty in bargaining under incomplete information: An experimental study of the bonus procedure

The sealed-bid k-double auction mechanism for two-person bargaining under incomplete information can be extended by providing a bonus for both traders if, and only if, an agreement is reached. Brams and Kilgour ( 1996, Group Decision and Negotiation, 5, 239 - 262) proved that there is a unique level of bonus, namely, half the difference between the buyer's bid and seller's ask, that induces the traders to bargain truthfully. Stein and Parco ( 2001, unpublished manuscript) extend the theoretical work to the case of partial bonus levels that reduce, but do not completely eliminate, misrepresentation of the reservation values. In the present study, we experimentally investigate the effects of providing different bonus values on the misrepresentation of the bargainers' reservation values. Our results show that implementation of a bonus has a significant impact on bargaining behavior but not nearly to the extent predicted by the equilibrium analysis. A reinforcement-based learning model originally proposed for the no bonus case accounts quite well for the results of all three experimental conditions

Two-stage contests with budget constraints: An experimental study

We report the results of an experiment on two-stage contests with budget-constrained agents competing to win an exogenously determined prize. In stage 1, agents first compete within their own groups by expending resources, and then in stage 2 the winners of each group compete with one another to win the prize by expending additional resources subject to the budget constraint. Winners in each stage are determined by Tullock's proportional contest success function. We present the subgame perfect equilibrium solution for this model, derive predictions for our experiment, and then test them experimentally. In agreement with previous experimental research on single-stage contests, the equilibrium model is flatly rejected due to over-expenditure in stage 1. A descriptive model that extends the equilibrium solution by allowing for (1) non-pecuniary utility of winning and (2) misperception of the probability of winning better accounts for some, but not all, of the behavioral regularities. Taking an alternative approach, we then turn to an adaptive learning model that accounts for several features of the dynamics of play but still significantly underpredicts the stage 1 expenditures. Published by Elsevier Inc

Equilibrium play in single-server queues with endogenously determined arrival times

We study a class of queueing problems with endogenous arrival times formulated as non-cooperative n-person games in normal form. With multiple equilibria in pure strategies, these queueing games give rise to problems of tacit coordination. We first describe a Markov chain algorithm used to compute the symmetric mixed-strategy equilibrium solution, and then report the results of an experimental study of a large-scale (n = 20) queueing game with fixed service time, FIFO queue discipline, and no early arrivals. Our results show consistent and replicable patterns of arrival that provide strong Support for mixed-strategy equilibrium play on the aggregate but not individual level. (C) 2004 Elsevier B.V. All rights reserved

The Effect of Stake Size in Experimental Bargaining and Distribution Games: A Survey

We review the literature on bargaining and distribution experiments to investigate whether changes in stake size have significant effects on behaviour in laboratory/field settings. We conclude that experiments in this field do not lead to clear/common results. The joint presence of opposing factors (e.g., increasing relative risk aversion and increasing cost of fairness) might be one reason contributing to this. Moreover, we argue that variables such as subjects’ financial conditions, cognitive abilities, risk attitudes, loss-aversion, justice orientations, and relevant personality characteristics should be controlled in laboratory experiments to understand the effect of stake size on behaviour, more clearly. Finally, quasi-experiments using data from (very) high-stake games/events and meta-analysis studies should complement (individual) controlled experiments. � 2016, Springer Science+Business Media Dordrecht