by Alexander Crable

2003, the United States and North Korea have been at odds over the creation and continuation of a North Korean nuclear weapons program. While North Korea lobbies strongly for these differences to be sorted out through bilateral negotiations between the two nations, the United States refuses to partake in any negotiations other than the multilateral Six-Party Talks. Seeking to determine if the bargaining framework (bilateral or multilateral) between several economic agents might grant one or more agents a strategic advantage, we developed a three-player bargaining model for both a single multilateral negotiation and for a series of bilateral negotiations involving all three players. We also included in our model “conflict coefficients” which can simulate disagreement erupting into damaging conflict between two players. Hence, our model can further simulate nations on the brink of armed conflict, companies at risk of entering a price war, or other scenarios where players might cause a
decrease in each other’s initial wealth or utility. Conflict coefficients were designed in such a way that they can be removed from the model effortlessly to attain more general results. We concluded that there are indeed strategic advantages and disadvantages of multilateral and bilateral bargaining games for each player depending on their disagreement points and the surpluses being divided. In cases of conflict bargaining, expected payoffs for each player and preferred bargaining framework are further affected by their own conflict coefficient and those of the other players.

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Advisor: Huseyin Yildirim

By Jessica Lohrman

Firm self-regulation with regards to illegal and unethical labor practices has become a significant trend recently, as firms face possible negative exposure from the investigatory media. This paper provides a theoretical analysis of the determinants corporate labor practices and the role played by the investigatory media in firm self-regulation. The model finds that firms, when facing a media investigation, are no more likely to use unethical labor regardless of how cost effective it is. Instead, the firm is actually driven towards certain labor choices based upon the parameters of the investigatory media’s profitability. This communicates the importance of outside monitoring bodies on the road towards improved global labor standards.

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Advisor: Huseyin Yildirim

By Alex Li

2008’s Democratic Presidential Primary will go down as one of the most competitive races in recent history. Two candidates, Senators Barack Obama (Illinois) and Hillary Clinton (New York), fought a see-saw battle to obtain enough delegates/vote-shares for the Democratic nomination. Although the race eventually dwelled down to these two players, for a while it was a dynamic three-player-race with Senator John Edwards (North Carolina) in the fold. During that time, many people were puzzled by Edwards’ insisting on staying in the race even when he had no foreseeable chance of becoming the party’s eventual nominee. In this honors thesis, I construct a theoretical model to explain Edwards’ reason for staying in the race. My model found that if Edwards attains a certain amount of vote-shares, depending on the external circumstances, he could have pushed the election into a backroom negotiation phase. In this phase, he would have become the most pivotal player as his relatively low amount of vote-shares would ironically turn him into the player with the greatest negotiating power. This could have allowed him to come out of the backroom negotiation with a final prize value that would have exceeded the efforts he inputted. My paper coins this as “The Edwards Effect” and explores the ramifications and conditions for its existence.

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Advisor: Huseyin Yildirim

By Lisa Lam

This paper develops a theoretical model to show the effects of simultaneously having both a competition between groups and one among the individuals of a tournament. The players are divided up among teams and compete for a at bonus for winning the team competition. At the same time, their efforts also determine if they will win another at bonus from winning the individual game among all
the tournament’s players. With the use of a specific team production function demonstrating substitution among the player’s efforts, the individual award seems to garner more overall group output than the group award. Under a specific production function demonstrating complementary efforts, players seem to be indifferent between the group and individual award. Lastly, a general production function that incorporates a variable measuring the degree of substitution was analyzed. The analysis showed that an individual award was beneficial to increasing overall team effort. The results imply that the payment scheme should be structured in a way that allocates larger individual rewards when the team efforts are more substitutable.

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Advisor: Huseyin Yildirim