Survey of Experimental Bargaining Formulations with Credible Threat Points, A

Glenn Harrison
January 1992  [90-GATT 20]

This study surveys and evaluates the experimental economics literature on bargaining. The basic results derived in this literature are assessed in terms of their relevance for the GATT negotiations underway, as well as the imposition of any GATT code that might be approved by the U.S. government. This survey is designed to address a reasonably specific context. Given the approval of any GATT-negotiated code, a bargaining game is presumed to occur between the various interest groups that are affected by U.S. agricultural policies and the government. This bargaining game will be assumed to occur in three stages. In the first stage, interest groups or government propose alternative reforms and compensation. In the second stage, coalitions form. In the third stage, votes occur in the various packages proposed. Two crucial features of this process are that the Executive Branch of the U.S. government can approve or veto the final package, and the fact that negotiations will occur in the "shadow of the law," in the sense that if negotiations break down there will be some credible difficult reform and compensation package effected.

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