Interpretations of corruption in intercultural bargaining

There is a fine line in business negotiations between being perceived as corrupt and having proper engagement with the natural tension and excitement of the business bargaining process. Combining literature review and experiential observation we provide a framework that will assist global business managers to more successfully negotiate cross-cultural business transactions. We identify some archetypal underpinnings of bargaining in a business context and question the established perceptions of corruption in intercultural business dealings. We conclude that different cultural systems produce variations of negotiating behaviour that need to be judged with a deeper local knowledge to avoid simply transferring inappropriate labels.

Bargaining in the shadow of the Law - using utility functions to support legal negotiation

Most dispute resolution is settled by negotiation rather than litigation. However, such bargaining often occurs in the shadow of the law. To help support interest-based negotiation, we explore the use of utility functions to support negotiation analysis. We discuss in detail a utility function we have developed in the area of family-law mediation. This function is currently being used as the basis of an online dispute resolution system.

Weakest collective rationality and the Nash bargaining solution

We propose a new axiom, weakest collective rationality (WCR) which is weaker than both weak Pareto optimality (WPO) in Nash’s (Econometrica 18:155–162, 1950) original characterization and strong individual rationality (SIR) in Roth’s (Math Oper Res 2:64–65, 1977) characterization of the Nash bargaining solution. We then characterize the Nash solution by symmetry (SYM), scale invariance (SI), independence of irrelevant alternatives (IIA) and our weakest collective rationality (WCR) axiom.

Distributive justice and the Nash bargaining solution

Suppes-Sen dominance or SS-proofness (SSP) is a commonly accepted criterion of impartiality in distributive justice. Mariotti (Review of Economic Studies, 66, 733–741, 1999) characterized the Nash bargaining solution using Nash’s (Econometrica, 18, 155–162, 1950) scale invariance (SI) axiom and SSP. In this article, we introduce equity dominance (E-dominance). Using the intersection of SS-dominance and E-dominance requirements, we obtain a weaker version of SSP (WSSP). In addition, we consider α − SSP, where α measures the degree of minimum acceptable inequity aversion; α − SSP is weaker than weak Pareto optimality (WPO) when α = 1. We then show that it is still possible to characterize the Nash solution using WSSP and SI only or using α -SSP, SI, and individual rationality (IR) only for any a Î [0,1)[01). Using the union of SS-dominance and E-dominance requirements, we obtain a stronger version of SSP (SSSP). It turns out that there is no bargaining solution that satisfies SSSP and SI, but the Egalitarian solution turns out to be the unique solution satisfying SSSP.

Asymmetric Nash bargaining solutions: a simple Nash program

This article proposes a simple Nash program. Both our axiomatic characterization and our noncooperative procedure consider each distinct asymmetric and symmetric Nash solution. Our noncooperative procedure is a generalization of the simplest known sequential Nash demand game analyzed by Rubinstein etal. (1992). We then provide the simplest known axiomatic characterization of the class of asymmetric Nash solutions, in which we use only Nash's crucial Independence of Irrelevant Alternatives axiom and an asymmetric modification of the well-known Midpoint Domination axiom.

How sensitive are bargaining outcomes to changes in disagreement payoffs?

We use a human-subjects experiment to investigate how bargaining outcomes are affected by changes in bargainers’ disagreement payoffs. Subjects bargain against changing opponents, with randomly drawn asymmetric disagreement outcomes that vary over plays of the game, and with complete information about disagreement payoffs and the cake size. We find that subjects only respond about half as much as theoretically predicted to changes in their own disagreement payoff and to changes in their opponent’s disagreement payoff. This effect is observed in a standard Nash demand game and a related unstructured bargaining game, in both early and late rounds, and is robust to moderate changes in stake sizes. We show theoretically that standard models of expected utility maximisation are unable to account for this under-responsiveness, even when generalised to allow for risk aversion. We also show that quantal-response equilibrium has, at best, mixed success in characterising our results. However, a simple model of other-regarding preferences can explain our main results.

Lying about the price? Ultimatum bargaining with messages and imperfectly observed offers

We introduce the taxicab game, related to the ultimatum game and Gehrig et al.'s (2007) yes/no game. The proposer makes an offer, and simultaneously sends a cheap talk message indicating (possibly falsely) the amount of the offer. The responder observes the message with certainty and the offer with probability p before accepting or rejecting the offer. We investigate versions with p=. 0 and p=. 0.5 along with the ultimatum game as a baseline. Intuition and a model comprising both standard economic agents and others who dislike inequity, lies and lying provide clear predictions that our experimental results support. As the likelihood increases of offers being seen, the offers themselves increase, messages over-state them less, and responders are more likely to accept (even when the offer is unseen). Also, responders are more likely to accept after truthful messages than after lies or when no message is sent.

Comparing bargaining solutions in the shadow of conflict: how norms against threats can have real effects

In many economic environments agents make costly and irreversible investments (in ``guns'') that may enhance their respective threat payoffs but also shrink the utility possibilities set. In such settings, with variable threats and a variable utility possibilities set, it becomes possible to rank different bargaining solutions in terms of efficiency. We compare bargaining solutions within a class in which the influence of the threat point on the bargaining outcome varies across solutions. Under symmetry, we find that the solution in which the threat point is least influential the equal sacrifice solution Pareto-dominates the other solutions. Since the equal sacrifice solution puts the least weight on the threat point, norms against threats (that can be seen in many seemingly rhetorical pronouncements in adversarial relations) can mitigate some of the costs of conflict and therefore have efficiency- enhancing effects.

The Australian union merger wave revisited

What factors explain the Australian trade union merger wave between 1991 and 1994? Existing explanations largely attribute it to the pro –amalgamation policy of the Australian Council of Trade Unions (ACTU)and other union leaders,and to declining union membership and decentralised bargaining. This paper reviews discussion of the causes of mergers and publicly available evidence upon them. It concludes that current explanations of the merger wave are an over–simplification. The effects of ACTU leadership, official union policy,and members' views are complex and not uniform and require more disaggregated analysis. Also,there has been a tendency to overstate the importance of membership decline and decentralised bargaining and to over – look other environmental factors such as changing occupational structure. The paper cautions against the assumption that variables influencing ACTU policy also shape affiate actions.