The Compromise Game: Two-Sided Adverse Selection in the Laboratory

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2009
Volume: 1
Issue: 1
Pages: 151-81

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze a game of two-sided private information where players have privately known "strengths" and can decide to fight or compromise. If either chooses to fight, the stronger player receives a high payoff and the weaker player receives a low payoff. If both choose to compromise, each player receives an intermediate payoff. The only equilibrium is for players to always fight. In our experiment, we observe frequent compromise, more fighting the lower the compromise payoff and less fighting by first than second movers. We explore several theories of cognitive limitations in an attempt to understand these anomalous findings. (JEL C91, D82)

Technical Details

RePEc Handle
repec:aea:aejmic:v:1:y:2009:i:1:p:151-81
Journal Field
General
Author Count
2
Added to Database
2026-01-25