Bargaining and network structure: An experiment
AbstractAbstract: We consider bargaining in a bipartite network of buyers and sellers, who can only trade with the limited number of people with whom they are connected. Such networks could arise due to proximity issues or restricted communication flows, as with information transmission of job openings, business opportunities, and transactions not easily regulated by external authorities. We perform an experimental test of a graph-theoretic model that allows us to decompose any two-sided network into simple networks of three types, with unique predictions about equilibrium prices for the networks in our sessions. We begin with two separate simple networks, which are then joined by an additional link. Participants appear to quickly grasp important characteristics of the networks. The results diverge sharply depending on how this connection is made, typically conforming to the theoretical directional predictions. Payoffs can be systematically affected even for agents who are not connected by the new link. We find evidence of a form of social learning the shares (publicly) allocated to others in the past affect what one is willing to accept.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 136 (2007)
Issue (Month): 1 (September)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Gary Charness & Margarida Corominas-Bosch & Guillaume R. Frechette, 2004. "Bargaining and Network Structure: An Experiment," Econometric Society 2004 North American Summer Meetings 653, Econometric Society.
- Charness, Gary B & Corominas-Bosch, Margarida & FRECHETTE, GUILLAUME, 2005. "Bargaining and Network Structure: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt7v98682v, Department of Economics, UC Santa Barbara.
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