Team selection - An experimental investigation

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Abstract

Players 1 and 2 own certain resources which Player 0, the entrepreneur, wants to employ. Let the gross profit of the entrepreneur 0 after selecting a team T of resources be V(T), where T can take values Φ, {1}, {2} or {1,2}. How much will Player 0 pay for the resources? In this paper, a simple stylized bargaining process, namely Ultimatum Bargaining, is assumed. In a first step, Players 1 and 2 demand certain rewards ai, for their resources. Player 0 then selects a team T, the members of which are paid by him at the rates they have demanded, ai. Then a0= V(T) - Σi∈Taiis left for the entrepreneur. Such a "bargaining structure" can be found, for example, in the PURPA-auctions (electricity auctions) in the United States. For most other cases, the game describes a possible last round with the ultimatum demands of the potential members. In this paper, experiments are presented with V({1, 2}) = DM 100.00, V(Φ) = 0, and with five different values for e = V({1}) or V({2}), the profit earned by one-person teams. Although the game-theoretic equilibria vary greatly for different values of e, the average demands of the potential team members remained fairly constant. © 1994.

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