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Title:Power asymmetry and escalation in bargaining PDF Logo
Authors:Vollstädt, Ulrike
Issue Date:2011
Series/Report no.:Jena economic research papers 2011,054
Abstract:Bargaining is prevalent in economic interactions. Under complete information, game theory predicts efficient bargaining outcomes (immediate acceptance of first offer) (see Rubinstein, 1982). However, continuous rejections of offers leading to inefficient delays (escalation) have regularly been found in previous bargaining experiments even under complete information (see Roth, 1995). I test experimentally (1) whether power asymmetry leads to more escalation in bargaining and (2) whether perspective-taking reduces escalation. I find that power asymmetry increases escalation, but that perspective-taking does not reduce escalation.
Subjects:two-person bargaining experiment
asymmetric power
escalation
perspective-taking
JEL:C78
D89
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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