Abstract
This paper identifies, and tests experimentally, a prediction of the Nash bargaining axioms that may appear counterintuitive. The context is a simple bargaining problem in which two players have to agree a choice from three alternatives. One alternative favours one player and a second favours the other. The third is an apparently reasonable compromise, but is in fact precluded as an agreed choice by the Nash axioms. Experimental results show that agreement on this third alternative occurs rather often. Our subjects’ behaviour could be interpreted as the paying of an irrationally high price, according to the Nash axioms, in order to reach a compromise agreement.
| Original language | English |
|---|---|
| Pages (from-to) | 359-376 |
| Number of pages | 8 |
| Journal | THEORY AND DECISION |
| Volume | 77 |
| Issue number | 3 |
| Early online date | 19 Aug 2014 |
| DOIs | |
| Publication status | Published - Oct 2014 |
Keywords
- Bargaining
- Compromise
- Experiments
- Nash axioms
