Litigation and Settlement in a Game with Incomplete Information: An Experimental Study(440 Lecture Notes in Economics and Mathematical Systems)

The book investigates a two-person game of litigation and settlement with incomplete information on one side. The experimental design allows investigation of how subjects solve the bargaining problem. A prominence level analysis is applied to the data and suggests that subjects tend to choose "round" numbers. It is shown that there exists a correlation between machiavellianism and subjects' adjustment behaviour in the game. The learning behaviour is discussed extensively. Plaintiffs' acceptance limits polarize at the beginning of the second play. A model of learning direction theory applied to explain subjects's behaviour over the course of the game.

Table of Contents:
1. Introduction.- 2. The Game-Theoretic Model and Equilibrium Sets.- 2.1 The Game Model.- 2.2 Pure Strategy Equilibria.- 2.3 One-Step and Iterative Elimination of Weakly Dominated Strategies.- 3. Experimental Design and Organisation of the Experiment.- 4. Experimental Results.- 4.1 General Results.- 4.2 Behavioural Characteristics and Learning Behaviour.- 5. Learning Theories.- 5.1 Alternative Approaches to Learning.- 5.2 A Descriptive Theory for the Adjustment Behaviour.- 5.3 Deviations from Direction Learning.- 5.4 Learning Theory of the Polarization Effect.- 5.5 Discriminant Analysis of the Polarization Effect.- 5.6 Summary Of Experimental Findings.- 6. Monte-Carlo Simulations and Testing of Learning Direction Theory Against a Simple Alternative Theory.- 6.1 Monte-Carlo Approach to our Models of Learning Direction Theory and the Simple Alternative Theory.- 6.2 Modeling of Direction Learning and the Experimental Design.- 6.3 Estimation of the Adjustment Curves of Inexperienced and Experienced Subjects.- 6.4 Relative Frequencies of Deviations from Direction Learning.- 6.5 Increments of Settlement Offers and Acceptance Limits.- 6.6 Tests for the Comparison of the Two Alternative Theories.- 7. Comparison of the Results of Direction Learning and the Simple Alternative Theory.- 7.1 Results of the First Play.- 7.2 Results of the Second Play.- 7.3 Results of the Third Play.- 7.4 Summary of the Simulations and the Comparison of the Two Theories.- 8. Summary.- Appendix A.- Appendix B.- Appendix C.- Appendix D.- References.