ICES Brown Bag for April 14

Events, Seminars | April 10, 2016

Join us for an ICES Brown Bag Lecture, featuring Shuwen Li.

Ms. Li, of George Mason University, will discuss her paper (co-authored with Daniel Houser) On Stochastic Bargaining: Equilibrium and Efficiency in the Lab (abstract). The talk will take place on Thursday, April 14th, from 12:00 to 12:30pm, in room 5075 of the Metropolitan Building, Arlington campus.

Coffee and dessert will be provided.

Please visit the Brown Bag Schedule to learn more about the Brown Bag series.

Abstract

We design experiments to investigate predictions from Merlo and Wilson’s(1995) stochastic k-player sequential bargaining theory, where both the size of the cake as well as the order in which players move follow a general Markov process. This environment has been widely used to explain the presence of a non-negligible frequency of agreement delays in macroeconomics and political economy (e.g., sovereign debt renegotiation, labor union strikes and parliamentary government formation). Despite its use and influence, no laboratory test of this theory has yet appeared. We design a two-player two-period stochastic bargaining game where the timing and efficiency of equilibrium agreement differ among treatments. Our design promises to shed light on how people reconcile delay with efficiency when negotiating in stochastic environments, and provides directions to take when extending the Merlo-Wilson (1995) framework to incorporate social preferences.

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