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Bargaining Efficiency And Screening: An Experimental Investigation

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  • Charness, Gary B

Abstract

This paper investigates whether information about generosity or fairness can be useful in lowering dispute costs and enhancing bargaining efficiency. Subjects were first screened using a dictator game, with the allocations chosen used to separate participants into two types. Mutually anonymous pairs of subjects then bargained, with a dispute cost structure imposed. Sorting with identification reduces dispute costs; there are also significant differences in bargaining efficiency across pairing types. Information about types is crucial for these differences and also strongly affects the relative bargaining success of the two types and the hypothetical optimal bargaining strategy.

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Bibliographic Info

Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt86r0x2tf.

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Date of creation: 01 Sep 1998
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Handle: RePEc:cdl:ucsbec:qt86r0x2tf

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Keywords: bargaining; fairness; screening; dispute cost; experiment;

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References

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  1. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 3(4), pages 367-388, December.
  2. Roth, Alvin E & Schoumaker, Francoise, 1983. "Expectations and Reputations in Bargaining: An Experimental Study," American Economic Review, American Economic Association, American Economic Association, vol. 73(3), pages 362-72, June.
  3. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  4. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262582384, December.
  5. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, American Economic Association, vol. 86(3), pages 653-60, June.
  6. Ochs, Jack & Roth, Alvin E, 1989. "An Experimental Study of Sequential Bargaining," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 355-84, June.
  7. Ashenfelter, Orley, et al, 1992. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," Econometrica, Econometric Society, Econometric Society, vol. 60(6), pages 1407-33, November.
  8. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 739-71, May.
  9. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 47(2), pages 268-298, May.
  10. R. M. Isaac & J. M. Walker, 2010. "Group size effects in public goods provision: The voluntary contribution mechanism," Levine's Working Paper Archive 310, David K. Levine.
  11. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, Elsevier, vol. 6(3), pages 347-369, May.
  12. Guth, Werner & Tietz, Reinhard, 1990. "Ultimatum bargaining behavior : A survey and comparison of experimental results," Journal of Economic Psychology, Elsevier, Elsevier, vol. 11(3), pages 417-449, September.
  13. Yang, Bill Z., 1996. "Litigation, experimentation, and reputation," International Review of Law and Economics, Elsevier, Elsevier, vol. 16(4), pages 491-502, December.
  14. Fudenberg, Drew & Tirole, Jean, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(2), pages 221-47, April.
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Cited by:
  1. Gary Charness & Margarida Corominas-Bosch & Guillaume R. Frechette, 2004. "Bargaining and Network Structure: An Experiment," Econometric Society 2004 North American Summer Meetings, Econometric Society 653, Econometric Society.
  2. Maroš Servátka, 2007. "Does Generosity Generate Generosity? An Experimental Study of Reputation Effects in a Dictator Game," Working Papers in Economics, University of Canterbury, Department of Economics and Finance 07/03, University of Canterbury, Department of Economics and Finance.
  3. Croson, Rachel & Konow, James, 2009. "Social preferences and moral biases," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 69(3), pages 201-212, March.
  4. Mary L. Rigdon & Kevin A. McCabe & Vernon L. Smith, 2007. "Sustaining Cooperation in Trust Games," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(522), pages 991-1007, 07.
  5. Eva Ranehill & Frédéric Schneider & Roberto A. Weber, 2012. "Growing groups, cooperation, and the rate of entry," ECON - Working Papers, Department of Economics - University of Zurich 103, Department of Economics - University of Zurich, revised May 2013.
  6. Bohnet, Iris & Kübler, Dorothea, 2000. "Compensating the cooperators: Is sorting in the prisoner's dilemma possible?," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2001,2, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  7. Birkeland d.y., Sigbjørn, 2010. "Negotiation under possible third party settlement," Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics 6/2011, Department of Economics, Norwegian School of Economics.
  8. Brosig, Jeannette, 2002. "Identifying cooperative behavior: some experimental results in a prisoner's dilemma game," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 47(3), pages 275-290, March.
  9. Carpenter, Jeffrey P., 2003. "Is fairness used instrumentally? Evidence from sequential bargaining," Journal of Economic Psychology, Elsevier, Elsevier, vol. 24(4), pages 467-489, August.

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