Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56883
Authors: 
Vollstädt, Ulrike
Year of Publication: 
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

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