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Focal points and payoff information in tacit bargaining

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  • Isoni, Andrea
  • Poulsen, Anders
  • Sugden, Robert
  • Tsutsui, Kei

Abstract

Schelling proposed that payoff-irrelevant cues can affect the outcome of tacit bargaining games by creating focal points. Tests of this hypothesis have found that conflicts of interest between players inhibit focal-point reasoning. We investigate experimentally whether this effect is reduced if players have imperfect information about each other's payoffs. When players know only their own payoffs, they fail to ignore this information even though it cannot assist coordination; the effects of payoff-irrelevant cues on coordination success are small. When no exact information about payoffs is provided, payoff-irrelevant cues are more helpful, but not as much as when conflict is absent.

Suggested Citation

  • Isoni, Andrea & Poulsen, Anders & Sugden, Robert & Tsutsui, Kei, 2019. "Focal points and payoff information in tacit bargaining," Games and Economic Behavior, Elsevier, vol. 114(C), pages 193-214.
    • Handle: RePEc:eee:gamebe:v:114:y:2019:i:c:p:193-214
    DOI: 10.1016/j.geb.2019.01.008
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    Cited by:

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    2. Radzvilas, Mantas & Karpus, Jurgis, 2021. "Team reasoning without a hive mind," Research in Economics, Elsevier, vol. 75(4), pages 345-353.
    3. Isoni, Andrea & Sugden, Robert & Zheng, Jiwei, 2020. "The pizza night game: Conflict of interest and payoff inequality in tacit bargaining games with focal points," European Economic Review, Elsevier, vol. 127(C).
    4. Francesco Fallucchi & Daniele Nosenzo, 2022. "The coordinating power of social norms," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 1-25, February.
    5. Schmidt, Robert J., 2019. "Identifying the Ranking of Focal Points in Coordination Games on the Individual Level," Working Papers 0660, University of Heidelberg, Department of Economics.
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    7. Schmidt, Robert J., 2019. "Capitalizing on the (false) consensus effect: Two tractable methods to elicit private information," Working Papers 0669, University of Heidelberg, Department of Economics.
    8. Sitzia, Stefania & Zheng, Jiwei, 2019. "Group behaviour in tacit coordination games with focal points – an experimental investigation," Games and Economic Behavior, Elsevier, vol. 117(C), pages 461-478.
    9. Dong, Zhiqiang & Zhang, Yanren, 2022. "Tournaments as coordination devices: Theory and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    10. Schmidt, Robert J., 2019. "Point beauty contest: measuring the distribution of focal points on the individual level," Working Papers 0667, University of Heidelberg, Department of Economics.
    11. Elten, Jonas van & Penczynski, Stefan P., 2020. "Coordination games with asymmetric payoffs: An experimental study with intra-group communication," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 158-188.
    12. Rojo Arjona, David & Sitzia, Stefania & Zheng, Jiwei, 2022. "Overcoming coordination failure in games with focal points: An experimental investigation," Games and Economic Behavior, Elsevier, vol. 136(C), pages 505-523.

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    More about this item

    Keywords

    Focal points; Tacit bargaining; Coordination; Conflict of interest; Payoff information; Payoff-irrelevant cue;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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