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Do separation rules matter? An experimental study of commitment

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  • Filip Vesely
  • Vivian Lei
  • Scott Drewianka

Abstract

Coasian reasoning predicts that the conditions under which parties may terminate a partnership will affect bargaining between partners, but not the durability of partnerships. This paper endeavors to test both predictions in an experimental setting that allows agents to form and end partnerships endogenously and to bargain over resources. We find that separation rules have less effect on bargaining than predicted by theory, but larger effects on partnership stability. Perhaps surprisingly, agents who are weaker relative to their partners are more successful when either party can end a partnership unilaterally than when both must consent to a separation.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00779954.2011.556073
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal New Zealand Economic Papers.

Volume (Year): 45 (2011)
Issue (Month): 1-2 ()
Pages: 97-117

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Handle: RePEc:taf:nzecpp:v:45:y:2011:i:1-2:p:97-117

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Related research

Keywords: separation rule; commitment; bargaining; experiments;

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