Does Game Theory Work? The Bargaining Challenge

Does Game Theory Work? The Bargaining Challenge

by Ken Binmore
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MIT Press

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Does Game Theory Work? The Bargaining Challenge

A collection of Ken Binmore's influential papers on bargaining experiments, with the author's newly written commentary addressing the challenges to game theory posed by the behavioral school of economics.

This volume brings together all of Ken Binmore's influential experimental papers on bargaining along with newly written commentary in which Binmore discusses the underlying game theory and addresses the criticism leveled at it by behavioral economists.

When Binmore began his experimental work in the 1980s, conventional wisdom held that game theory would not work in the laboratory, but Binmore and other pioneers established that game theory can often predict the behavior of experienced players very well in favorable laboratory settings. The case of human bargaining behavior is particularly challenging for game theory. Everyone agrees that human behavior in real-life bargaining situations is governed at least partly by considerations of fairness, but what happens in a laboratory when such fairness considerations supposedly conflict with game-theoretic predictions? Behavioral economists, who emphasize the importance of other-regarding or social preferences, sometimes argue that their findings threaten traditional game theory. Binmore disputes both their interpretations of their findings and their claims about what game theorists think it reasonable to predict.

Binmore's findings from two decades of game theory experiments have made a lasting contribution to economics. These papers — some co-authored with other leading economists, including Larry Samuelson, Avner Shaked, and John Sutton — show that game theory does indeed work in favorable laboratory environments, even in the challenging case of bargaining.

Does Game Theory Work? The Bargaining Challenge, Volume 2

Product Details

ISBN-13: 9780262026079
Publisher: MIT Press
Publication date: 04/02/2007
Series: Economic Learning and Social Evolution
Edition description: New Edition
Pages: 424
Product dimensions: 6.00(w) x 9.00(h) x 1.00(d)

Table of Contents

Series Foreword     vii
Introduction     1
Getting to Equilibrium?     23
"Does Minimax Work? An Experimental Study"   Joe Swierzbinski   Chris Proulx     27
Which Equilibrium?     63
"Focal Points and Bargaining"   Joe Swierzbinski   Steven Hsu   Chris Proulx     67
The Ultimatum Game     103
"Testing Noncooperative Bargaining Theory: A Preliminary Study"   Avner Shaked   John Sutton     113
Inequity Aversion?     119
"A Backward Induction Experiment"   John McCarthy   Giovanni Ponti   Larry Samuelson   Avner Shaked     123
Outside Options     165
"An Outside Option Experiment"   Avner Shaked   John Sutton     171
Forced Breakdown     189
"Do People Exploit Their Bargaining Power? An Experimental Study"   Peter Morgan   Avner Shaked   John Sutton     193
Lost Opportunities     223
"Hard Bargains and Lost Opportunities"   Chris Proulx   Larry Samuelson   Joe Swierzbinski     227
Unequal Bargaining Power     251
"A Little Behavioralism Can Goa Long Way"   Joe Swierzbinski     257
More Ultimata     277
"Fairness or Gamesmanship in Bargaining: An Experimental Study"   John Sutton   Avner Shaked     279
Backward Induction?     303
"A Note on Backward Induction"     305
"Rationality and Backward Induction"     309
Equilibrium Selection in the Ultimatum Game     331
"Learning to be Imperfect: The Ultimatum Game"   John Gale   Larry Samuelson     333
Generalizing Rubinstein     369
"Bargaining Theory without Tears"     371
Notes to Chapter Introductory Remarks and Reprint Acknowledgments     391
Bibliography for Chapter Introductory Remarks     395
Index     401

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