The Negotiation Agreement Area: An experimental analysis of two-person characteristic function games

Abstract

The Negotiation Agreement Area (NAA) is a descriptive area theory for two-person bargaining games in characteristic function form. Laboratory experiments show that the NAA is significantly more successful in prediction than other theories. The experiments conducted in this study as well as previous experiments (Horowitz 1977) indicate that subjects tend to have a “behavioral threshold” at zero if the coalition shares can be negative. Respecting this fact, the NAA differentiates between games with positive and those with negative alternatives. Moreover, the paper investigates opening demands of negotiators and the negotiation process.