A Proposer has $100 to divide. In Scenario A, the Proposer makes a take-it-or-leave-it offer to a single Responder. If the Responder accepts, the money is split as proposed; if they reject, both get $0. In Scenario B, the Proposer makes the same take-it-or-leave-it offer to two competing Responders. The first Responder to accept the offer gets that amount, and the Proposer keeps the rest; if both reject, everyone gets $0. Based on an analysis of these two situations, how would the amount offered by a rational, self-interested Proposer most likely change from Scenario A to Scenario B?

In a bargaining scenario where one person makes a take-it-or-leave-it offer simultaneously to two other individuals, a person who rejects a low offer can be certain that their action will prevent the offer-maker from receiving any payment.

Negotiation Strategy Analysis

The Impact of Competition on Bargaining Outcomes

Explaining the Shift in Bargaining Power

Consider a bargaining game where a Proposer makes a take-it-or-leave-it offer. Match each element of the game to the most likely outcome when a second, competing Responder is added to the scenario, changing it from a one-on-one negotiation to a one-on-two negotiation.

When a second, competing Responder is introduced into a take-it-or-leave-it bargaining scenario, the original Responder's power to punish an unfair offer is diminished. This shift in power typically allows the ________ to secure a larger portion of the total amount being divided.

Negotiation Strategy Shift

When a second, competing Responder is introduced into a take-it-or-leave-it bargaining scenario, the original Responder's power to punish an unfair offer is diminished. This shift in power typically allows the ________ to secure a larger portion of the total amount being divided.

Contract Negotiation Strategy