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Crisis Bargaining with Collective Decision Making

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  • Jeongbin Kim
  • Thomas R. Palfrey
  • Jeffrey Zeidel

Abstract

Crisis bargaining games are widely used to analyze bilateral conflicts, featuring strategic bluffing akin to poker. Players risk substantial losses from overplaying their hand but can secure significant gains if their opponent concedes. Since decisions in crises typically emerge from collective decision processes within organizations composed of diverse individual members, we use the team equilibrium solution concept to analyze these games, providing a framework for group strategic decision-making under collective choice rules (Kim, et al. 2022). In a team equilibrium, group members have rational expectations about opponents' strategies and share common average payoffs, with private payoff perturbations. Voting rules determine group decisions, assuming optimal voting behavior. Depending on the payoff structure, collective choice rules can lead to more or less bluffing and varying aggression compared to Perfect Bayesian Equilibrium. Our experiment varies game payoffs, group size, and voting rules. Behavior is inconsistent with Perfect Bayesian Equilibrium but broadly consistent with team equilibrium predictions.

Suggested Citation

  • Jeongbin Kim & Thomas R. Palfrey & Jeffrey Zeidel, 2025. "Crisis Bargaining with Collective Decision Making," NBER Working Papers 33392, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33392
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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