Thesis Submission Date

Spring 2011

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

David Bjerk

Rights Information

© 2011 Myles MacDonald

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Terms of Use for work posted in Scholarship@Claremont.

Abstract

Behavioral economics is widely recognized as a rising field in economics, one whose discoveries and implications are not yet completed or understood. At the same time, economic theory plays an enormous role in our governmental and legal system. In particular, the Coase Theorem and its implications have affected nearly every area in the field of law and economics. This paper proposes a experimental test of Coasean bargaining in situations using two competitive players whose payoffs depend on minimizing their costs of mitigating the externality. A rational player’s action can be predicted ahead of time, and the rationality of the game’s outcome can be objectively measured. If behavioral effects found in consumer goods situations by other experimenters carry over to competitive business situations, then a substantial review of law regarding such situations is in order.

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