Unity is Strength: An Experimental Study of Decentralized and Collective Bargaining

Working Paper No. 99-31

17 Pages Posted: 11 Jul 2000

See all articles by Siegfried Berninghaus

Siegfried Berninghaus

Institut fuer Statistik und Mathematische Wirtscha

Werner Güth

Max Planck Institute for Research on Collective Goods; Luiss Guido Carli University

Claudia Keser

University of Goettingen (Göttingen)

Date Written: March 2000

Abstract

We present an experiment where two players bargain with a third player. They can bargain either separately or form a joint venture to bargain collectively. Our theoretical benchmark solution predicts decentralized bargaining, as only one player has an interest in forming a joint venture. However, we observe a significant amount of collective bargaining. Collective bargaining, when compared with decentralized bargaining, has no significant effect on the payoffs of the players in the joint venture but reduces the payoff of the third player.

Keywords: Bargaining, joint venture, merger, experiments, equilibrium selection

JEL Classification: C78, C92

Suggested Citation

Berninghaus, Siegfried and Güth, Werner and Keser, Claudia, Unity is Strength: An Experimental Study of Decentralized and Collective Bargaining (March 2000). Working Paper No. 99-31, Available at SSRN: https://ssrn.com/abstract=215859 or http://dx.doi.org/10.2139/ssrn.215859

Siegfried Berninghaus

Institut fuer Statistik und Mathematische Wirtscha ( email )

Building 20.21
Universitaet Karlsruhe Gebaeude 20.21
76128 Karlsruhe
Germany

Werner Güth

Max Planck Institute for Research on Collective Goods

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Claudia Keser (Contact Author)

University of Goettingen (Göttingen) ( email )

Platz der Göttinger Sieben 3
Göttingen, 37073
Germany

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