Ebook: Two-Person Bargaining Experiments with Incomplete Information

Think of the following situation: A project yielding a gross profit of 100 is offered to two firms. The project can only be conducted by a cooperation of the two firms. No firm is able to conduct the project alone. In order to receive the project the firms have to agree on the allocation of the gross profit. Each of both firms has an alternative project it conducts in case the joint project is not realized. The profitability of an allocation of the joint gross profit for a firm depends on the gross profit from its alternative project. The gross profit from an alternative project can be either 0 (low alternative value) or O

---

This book takes three different approaches to the two-person bargaining problem with incomplete information: The game theoretic analysis, the study of the spontaneous behavior of subjects in a game playing experiment, and the investigation of strategies programmed by highly experienced subjects in a strategy experiment. The two different experimental approaches allow to study the bargaining behavior which emerges spontaneously in interactive plays of two subjects, and moreover the instructions experienced subjects give to a representative. The three approaches together provide a vivid picture of theoretical and experimentally observed behavior in the two-person bargaining problem. The synopsis of these different approaches is a novelty in the analysis of boundedly rational behavior.