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Strategic Alliances in a Veto Game: An Experimental Study

Author

Listed:
  • Chulyoung Kim

    (Yonsei Univ)

  • Sang-Hyun Kim

    (Yonsei Univ)

  • Jinhyuk Lee

    (Korea Univ)

  • Joosung Lee

    (University of Edinburgh)

Abstract
In a veto game, we investigate the effects of “buyout†which allows non-veto players strategically form an intermediate coalition. We report two main experimental findings in this paper. First, the frequency of intermediate coalition formation is much lower than predicted by theory, regardless of the relative negotiation power between veto and non-veto players. Second, allowing coalition formation among non-veto players does not affect the surplus distribution between veto and non-veto players, which diverges from core allocations. This finding contrasts to the literature, which views the ability to form an intermediate coalition as a valuable asset for non-veto players in increasing their bargaining power. Alternatively, we discuss inequity aversion as a possible explanation to support the prevalence of non-core allocations in our data.

Suggested Citation

  • Chulyoung Kim & Sang-Hyun Kim & Jinhyuk Lee & Joosung Lee, 2021. "Strategic Alliances in a Veto Game: An Experimental Study," Working papers 2021rwp-183, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2021rwp-183
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    More about this item

    Keywords

    coalition bargaining; veto game; buyout; strategic coalition formation; veto player; experiment.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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