How do coalitions get built? Evidence from an extensive form coalition game with and without communication

Abstract

In the laboratory, we investigate a non-cooperative three-person coalition game with externalities and the opportunity to extend existing coalitions. One bargainer, the builder, can propose and build a coalition over two stages. We examine the hypothesis that both absolute and relative payoffs affect the coalition formation process (and outcome). We observe many inefficient two-person final coalitions, and that the distribution of outcomes is sensitive to the constellation of both absolute and relative payoffs. Relative payoffs appear to be applied more myopically than has been observed in bilateral sequential bargaining games or suggested by social preference models. We hypothesize that the prevalence of two-person coalitions stems from builder's uncertainty about individual acceptance thresholds. In fact, allowing nonbinding communication among the bargainers increases the prevalence of efficient coalitions. The main implication is that efficient coalition building involves strategies for mitigating the strategic uncertainty inherent in building coalitions.

Humans and the core partition: An agent-based modeling experiment

“…We are not the first to observe non-core partitions from human play. Bolton and Brosig-Koch [ 33 ] observed many inefficient two-person final coalitions. The situation with the multiple core partitions game was different.…”

“…The main focus of experiments using cooperative game theory is to understand human behavior better, e.g., Bolton and Brosig-Koch [ 33 ] tried to understand what coalitions form. There are very few papers that have conducted these experiments for other reasons; for example, Berl, McKelvey [ 34 ] conducted an experiment on an NTU cooperative game to determine the validity of the core with regards to human play.…”

Research on the optimal path of product innovation diffusion model based on game theory

“…In the standard technique, the assumption is as follows: all participants are aware of pay function of other people while participants in the incomplete information participants are not sure about payments of other people. Bayesian Nash equilibrium (Bayesian Nash equilibrium) is analyzed on the basis of many game theories [14] . Harsanyi's thoughts are mainly used in "mechanism design" problem.…”

Respecting entitlements in legislative bargaining: A matter of preference or necessity?

“…InBaranski and Morton (2020), an all-way split is defined as a proposal in which all members receive shares greater than or equal to 5% of the surplus to be divided. Given our focus on whether entitlements are respected, we consider 10% a more appropriate limit to identify a significant share and therefore refer to such allocations as all-way splits, in a slight abuse of the term.18 As found inBolton and Brosig-Koch (2016), strategic uncertainty regarding the acceptance threshold of responders makes predictions in multilateral bargaining difficult.19 One may object that our subjects may collect more information in the majority treatment because they see others' current proposals before they vote on each of them, while in the dictator treatment, they see only the selected dictator's proposal. Note, however, that subjects have no information regarding the acceptance of the two proposals that are not selected.…”