Emotions in bargaining

Emotion as utility in the Rubinstein model

Master's Thesis , 2014 , 58 Pages , Grade: 1,7

Business economics - Business Management, Corporate Governance

Mit der vorliegenden Arbeit wurde die Verknüpfung von bekannten Verhandlungsmodellen der Spieltheorie mit verschiedenen Ansätzen zur Untersuchung des Einflusses von Emotionen auf den Verhandlungsausgang betrachtet. Zu Grunde liegt das Rubinsteinspiel, das im ersten Teil genauer erklärt wird.
In der Literaturbetrachtung des zweiten Teils werden verschiedene Artikel zusammengefasst, die in der Motivation geschrieben wurden die tatsächliche Beobachtung von Emotionen in verhandlungstheoretischen Experimenten zu erklären und Modelle (weiter) zu entwickeln, die diesen Beobachtungen Rechnung tragen. Im dritten Teil wird am Beispiel einer spezifischen Verhandlungssituation – dem Verhandeln über den Lohn eines Berufseinsteigers– der Einfluss von Emotionen mit Inspiration aus der Literatur intersucht. Ebenfalls wird ein Modell vorgestellt, das den Ausgang von spezifischen Verhandlungssituationen genauer nachstellen kann.

With the present work, the combination of well-known bargaining models of game theory with different approaches to study the influence of emotions on the outcome of negotiations was observed. Basis is the Rubinstein game that is explained in detail in the first part. The second part concludes various items which were written in the motivation to explain the observations of emotions made in actual bargaing-theoretical experiments, and to develop models that take those observations into account. In the third part a specific negotiation situation is exemplary represented- the bargaining over wages of a job applicant- to observe the influence of emotions, inspired by the methods of the literature investigated earlier. Moreover, a model is presented which can calculate the output of specific negotiation situations more accurately.

Table of contents

Table directory

Figure directory

Introduction
1. A case of negotiation
2. Two possible outcomes and emotions

A) Bargaining theory
1. An introduction into game theory
i. A simple game and dominant strategies
ii. The Nash equilibrium and the sub-game perfect equilibrium
iii. Pure and mixed strategies
2. Games in bargaining theory
i. Cooperative bargaining and the Nash bargaining solution
ii. The Rubinstein model: a non-cooperative game
a) Introduction and example
b) Equilibrium
c) Implementing alternative utilities
d) Uniqueness of equilibrium

B) Emotions in bargaining- theory – an overview
1. Incorporating fairness into game theory and economics – Matthew Rabin (1993)
2. Modeling altruism and spitefulness in experiments – David K. Levine (1998)
3. A theory of fairness, competition and cooperation
– Ernst Fehr and Klaus Schmidt (1999)
4. A theory of equity, reciprocity and competition
– Gary E. Bolton and Axel Ockenfels (2000)
5. Bargaining with reference dependent preferences –Compte and Jehiel (2003)
6. Introducing social norms in game theory – Raúl López-Pérez (2007)
7. Bargaining with history-dependent preferences – Duohze Li (2007)
8. Strategic extremism: bargaining with endogenous breakdown probabilities and order of play – Elie Appelbaum (2008)

C) How to bring emotions into bargaining
– feasible models of negotiation for a higher wage
1. Comparing two outcomes - a closer look
2. Modelling two outcomes
i. Possible outcome one: leaving in anger
ii. Possible outcome two: the terror regime
3. A general model for the emotional negotiation for wages
i. How a model for emotional bargaining could look like
ii. An alternative form

Conclusion

Literature

• College: Johannes Gutenberg University Mainz
• Grade: 1,7
• Author: Dominik Seidemann (Author)
• Publication Year: 2014
• Pages: 58
• Catalog Number: V295055
• ISBN (eBook): 9783656933014
• ISBN (Book): 9783656933021
• Language: English
• Tags: emotions, emotion, rubinstein