The Dynamics of Coalition Formation - An Experiment in Continuous Time

We experimentally investigate behavior in a repeated multilateral bargaining game. Subjects interact in groups of three, bargaining over the distribution of payments which occur at regular time intervals. During a given interval, payments occur if and only if a majority is in agreement about their allocation. The game ends after a prespecified surplus has been exhausted. Aside from these rules, we purposefully impose little structure on the bargaining process. Most importantly, we do not exogenously impose a sequence of moves (proposals and votes). Instead, all players may propose or agree to an allocation at any point in real time. We investigate the frequency and stability of different types of agreements, as well as transitions between them. The most frequent agreement is an equal split among the members of a minimum winning coalition. The most stable is the three-way equal split. Our results resemble those obtained by Battaglini and Palfrey (2012) in a similar but more structured experimental setting.