Threat in a two-person game

A two-person nonzero-sum game which provides one player with a threat option is experimentally investigated in this study. In the game, both players have a dominating strategy choice but the "natural" outcome of the game, defined as the intersection of dominating strategy choices, gives one player his largest payoff and the other player his next to smallest. However, the "dissatis-fied" player (the one who does not receive his largest payoff at the natural outcome) can, by switching his strategy choice, reduce the other's payoffs but only at a cost to himself. The dissatisfied player's ability to lower the other's payoffs constitutes a "threat."It was found that in repeated trials of play of this game, those players who were likely to carry out their threats were those who won the most concessions from the other. The results of this study suggest that a threat-appeasement, punishment-capitulation interaction develops between the players. That is, the existence of the threat option for one player leads the other to make concessions in order to avoid punishment and, once punishments are carried out, they too are likely to result in concessions for the punishers.It is also noted that the "sure-thing" principle fails to provide an adequate description of the strategy choice behavior of naive subjects.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/32825/1/0000200.pd