Mit der vorliegenden Arbeit wurde die Verknüpfung von bekannten Verhandlungsmodellen der Spieltheorie mit verschiedenen Ansätzen zur Untersuchung des Einflusses von Emotionen auf den Verhandlungsausgang betrachtet. Zu Grunde liegt das Rubinsteinspiel, das im ersten Teil genauer erklärt wird.
In der Literaturbetrachtung des zweiten Teils werden verschiedene Artikel zusammengefasst, die in der Motivation geschrieben wurden die tatsächliche Beobachtung von Emotionen in verhandlungstheoretischen Experimenten zu erklären und Modelle (weiter) zu entwickeln, die diesen Beobachtungen Rechnung tragen. Im dritten Teil wird am Beispiel einer spezifischen Verhandlungssituation – dem Verhandeln über den Lohn eines Berufseinsteigers– der Einfluss von Emotionen mit Inspiration aus der Literatur intersucht. Ebenfalls wird ein Modell vorgestellt, das den Ausgang von spezifischen Verhandlungssituationen genauer nachstellen kann.
With the present work, the combination of well-known bargaining models of game theory with different approaches to study the influence of emotions on the outcome of negotiations was observed. Basis is the Rubinstein game that is explained in detail in the first part. The second part concludes various items which were written in the motivation to explain the observations of emotions made in actual bargaing-theoretical experiments, and to develop models that take those observations into account. In the third part a specific negotiation situation is exemplary represented- the bargaining over wages of a job applicant- to observe the influence of emotions, inspired by the methods of the literature investigated earlier. Moreover, a model is presented which can calculate the output of specific negotiation situations more accurately.
Table of Contents
Introduction
1. A case of negotiation
2. Two possible outcomes and emotions
A) Bargaining theory
1. An introduction into game theory
i. A simple game and dominant strategies
ii. The Nash equilibrium and the sub-game perfect equilibrium
iii. Pure and mixed strategies
2. Games in bargaining theory
i. Cooperative bargaining and the Nash bargaining solution
ii. The Rubinstein model: a non-cooperative game
a) Introduction and example
b) Equilibrium
c) Implementing alternative utilities
d) Uniqueness of equilibrium
B) Emotions in bargaining- theory – an overview
1. Incorporating fairness into game theory and economics – Matthew Rabin (1993)
2. Modeling altruism and spitefulness in experiments – David K. Levine (1998)
3. A theory of fairness, competition and cooperation – Ernst Fehr and Klaus Schmidt (1999)
4. A theory of equity, reciprocity and competition – Gary E. Bolton and Axel Ockenfels (2000)
5. Bargaining with reference dependent preferences –Compte and Jehiel (2003)
6. Introducing social norms in game theory – Raúl López-Pérez (2007)
7. Bargaining with history-dependent preferences – Duohze Li (2007)
8. Strategic extremism: bargaining with endogenous breakdown probabilities and order of play – Elie Appelbaum (2008)
C) How to bring emotions into bargaining – feasible models of negotiation for a higher wage
1. Comparing two outcomes - a closer look
2. Modelling two outcomes
i. Possible outcome one: leaving in anger
ii. Possible outcome two: the terror regime
3. A general model for the emotional negotiation for wages
i. How a model for emotional bargaining could look like
ii. An alternative form
Objectives and Research Themes
This thesis examines the integration of emotions into traditional game-theoretic bargaining models, specifically the Rubinstein game. The primary research question explores how irrational behavior and emotional responses, such as anger or feelings of unfairness, influence negotiation outcomes and whether these can be formally modeled to reflect real-world wage negotiations more accurately.
- The application of Rubinstein's non-cooperative bargaining framework.
- Analysis of existing psychological and game-theoretical literature on fairness, altruism, and social norms.
- Development of utility functions that incorporate emotional factors like anger and perceived unfairness.
- Modeling specific wage negotiation scenarios to observe the impact of emotions on the final outcome.
Excerpt from the Book
2. Two possible outcomes and emotions
Maybe both players will agree on an acceptable compromise and will live on happily ever after. This is surely true for many real negotiations. But this is not what this paper is about. Surely a relatively happy outcome can very well be described by a lot of means of game theory and economic models and emotions do not even necessarily have to be considered in detail to achieve this outcome. Any outcome where the agents maximized their utility until they found equilibrium can be considered as an outcome of this kind. This paper deals with the possible upsides and downsides of emotions, situations where emotions affect the agents utilities in an unpredicted good or bad way so that no or different equilibria are achieved.
The first possible outcome is the one with the most observable emotions: negotiation “fails”. The young professional in our example is annoyed by the way negotiation goes and eventually refuses to take the job. She leaves and neither she nor the firm is very happy about that.
The second outcome is that the negotiation had led to an agreement, but an agreement that leaves one or both players with positive or negative emotions.
One scenario in this case is a rather quiet one. She accepts a relatively low wage (or her boss accepts the high wage) and then one of them will constantly not be completely happy at the situation. If that does not have any effect on the other player’s emotion in a way that both agree on a new agreement eventually, an unhappy player will leave the firm sooner or later.
A more interesting scenario is one where the emotions of one player do affect the other party. For example, the sad end of the story would be if the young adult agreed on a relatively low wage, but would show her angry attitude at work ever after. The firm, the colleagues and as their representative the boss would suffer from that event. In theory, this situation would look the same the other way around, if the boss agreed on a high wage and would then show his anger, which would then badly contrast with the joy of the employee earning high wages.
Chapter Summaries
Introduction: Discusses the traditional economic assumption of rational, utility-maximizing agents and the necessity of incorporating emotions into bargaining theory on an individual level.
A) Bargaining theory: Provides a technical overview of game theory, including Nash equilibrium, sub-game perfect equilibrium, and the Rubinstein model.
B) Emotions in bargaining- theory – an overview: Reviews established research papers that incorporate fairness, altruism, social norms, and strategic extremism into game-theoretic models.
C) How to bring emotions into bargaining – feasible models of negotiation for a higher wage: Proposes specific applications of modified Rubinstein games to model wage negotiations involving emotional outcomes like anger or post-agreement dissatisfaction.
Keywords
Game Theory, Rubinstein Model, Bargaining, Emotions, Wage Negotiation, Fairness, Utility Function, Rationality, Strategic Extremism, Social Norms, Altruism, Equilibrium, Modeling, Inequity Aversion, Behavioral Economics.
Frequently Asked Questions
What is the primary focus of this thesis?
This thesis focuses on the role of emotions in bargaining situations, specifically how human emotions can be formally integrated into standard game-theoretic models to better explain real-world negotiation outcomes.
What are the central thematic areas?
The work centers on bargaining theory (Rubinstein model), the implementation of utility functions to account for psychological factors, and practical scenarios like wage negotiations.
What is the primary research goal?
The primary goal is to bridge the gap between traditional economic models—which assume rational, utility-maximizing behavior—and the observed influence of emotions on outcomes such as failed negotiations or post-agreement dissatisfaction.
Which scientific methods are employed?
The author uses mathematical modeling, specifically adapting non-cooperative game theory and the Rubinstein bargaining model, to incorporate emotional variables like anger and fairness-seeking behavior.
What is covered in the main body?
The main body covers foundational game theory, a literature review of existing emotional bargaining models, and the author's own proposed models for emotional wage negotiations.
Which keywords characterize this work?
Key terms include Game Theory, Rubinstein Model, Bargaining, Emotions, Wage Negotiation, and Fairness.
How does the author model "leaving in anger"?
The author adapts a model of strategic extremism (originally by Appelbaum, 2008), where the probability of the negotiation breaking down (the surplus being destroyed) increases with the intensity of the "extremism" or anger felt by the negotiator.
What is the "terror regime" scenario?
This scenario describes a situation where an agreement is reached, but one party is unhappy due to unfair terms; the author models how this unhappiness manifests as a penalty that reduces the utility of both parties after the contract is signed.
- Quote paper
- Dominik Seidemann (Author), 2014, Emotions in bargaining, Munich, GRIN Verlag, https://www.grin.com/document/295055
