Does competition affect social preferences in the context of a bargaining game?

Abstract

In the first part of this paper, we have a generally review about several typical experiments and their results. Then based on the empirical study, especially the achievement of Güth et al. (1982) and Fischbacher et al. (2009), we have a full discussion on how competition affects social preferences in the context of a bargaining game.

Introduction

Economists have long been interested in the bargaining games. There is a considerable amount of literature published in this field by now. Firstly Neumann and Morgenstern (1944) studied bargaining games in the book The Theory of Games and Economic Behavior. The bargaining game is a kind of typical dynamic game and plays an essential role in game theory. In 1982, Rubinstein suggested bargaining games of alternating offers model which was based on the work of Stalh in 1972 and Krelle in 1976. Generally, it is regarded as the most classic literature about non-cooperative games theory.

Additionally, John Forbes Nash published two essays in 1950 and 1951 respectively, which were the turning point of non-cooperative games. His contribution about Nash equilibrium applied to solve game theory problems became the foundation for he won the 1994 Nobel Prize in economics, and the research is quite practicable and is applied in various fields. Then in 1986, Rubinstein et al (1986) made further research on bargaining games by analyzing the relationship between the static axiomatic and the dynamic strategic, which made a contribution to modify Nash bargaining solution.

At the end of 20th century, many economists began to concentrate on the impact of competition to bargaining game, and among them, what Roth et al. (1991) have done maybe the most typical one by making a series of experiments among four countries to find the bargaining and market behavior. After Roth, Fischbacher et al. (2009) conducted several specified experiments on the power of competition to proposers and responders with fairness, and they found that the outcome of responder’s average share of the pie would have a significant change by merely increasing small in competition levels. In view of all that has been mentioned so far, one may suppose that we first have a look at a famous bargaining game experiment.