The present paper investigates the effects of bargaining structures and agendas on the quality differentiation/location in the final-goods market. The framework is a unionized duopoly industry in the context of an unconstrained Hotelling linear city model. The presence of labor union(s) and the...

"One of the successes in contemporary social science is the development and proliferation of game theory. For a wide range of phenomena, game theory produces enormous insight into the strategic interaction of individuals. Its greatest power lies with predicting the behavior of large groups --...

How is negative reciprocity cultivated in an environment of violent conflict? This study investigates how students in the West Bank react to unfair proposals in an ultimatum game. Proposals submitted with Hebrew as compared to Arab handwriting are rejected more often. Israelis must offer 15...

Do military alliances foster aggressive behavior in allies to the point of undermining the security goal of the alliance? Like others, we find that alliance commitments may cause moral hazard because allies do not fully internalize the costs of actions that can lead to war. But unlike others, we...

Despite many applications of prospect theory's concepts to explain political and strategic phenomena, formal analyses of strategic problems using prospect theory are rare. Using Fearon's model of bargaining, Tversky and Kahneman's value function, and an existing probability weighting function, I...

Riker's `size principle' predicts that only minimal winning coalitions (MWCs) will form in n-person zero-sum games that satisfy certain conditions. After summarizing the logic of this principle, a model is proposed in which n players can be ordered from most to least weighty. Two different kinds...

We look at the basic applications of cooperative game theory to economic situations. These include bargaining and cooperative equilibria, especially as the number of players increases without bound. The core and the Shapley value are the fundamental tools for these applications. We consider the...

Learning models predict that the relative speed at which players in a game adjust their behavior has a critical influence on long term behavior. In an ultimatum game, the prediction is that proposers learn not to make small offers faster than responders learn not to reject them. We...

A new procedure is proposed for settling disputes which combines binding arbitration (BA) and final-offer arbitration (FOA). Unlike either of the two pure procedures, combined arbitration (CA) induces the two parties to converge in making their final offers. Under BA, the arbitrator's settlement...