SFB 303 Discussion Paper No. B - 219

Author: Selten, Reinhard, and Bettina Kuon
Title: Demand Commitment Bargaining in Three-Person Quota Game Experiments
Abstract: It is the purpose of this paper to report on experiments with three-person quota games based on a finite laboratory procedure called the demand commitment model. Other computerized methods for playing characteristic function games are infinite extensive games. Strictly speaking, infinite horizon games cannot be played in the laboratory. Therefore it is desirable to develop finite procedures like the demand commitment model.
The experiments reported here all concern three-person quota games without the grand coalition and with zero values for the one-person coalitions. For such games classical cooperative theories predict quota agreements, i.e. two-person coalitions with the quotas of the members as payoffs. Experiments with other procedures have shown that predictions based on classical cooperative game theory tend to perform poorly (Selten 1987, Uhlich 1990). However, in view of the fact that the demand commitment model has a much simpler structure than other procedures it seemed to be possible that in experiments with this procedure behavior may converge to quota agreements under the right circumstances.
The non-cooperative analysis of the demand commitment model applied to three-person quota games yields quota agreements as neutral equilibrium outcomes. Here the term "neutral" characterizes equilibria with the property that in case of indifference all optimal choices are taken with equal probability.
Creation-Date: August 1992
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