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To Commit or not to Commit? An Experimental Investigation of Pre-Commitments in Bargaining Situations with Asymmetric Information

Author

Listed:
  • Sönke Hoffmann
  • Benedikt Mihm
  • Joachim Weimann

Abstract

In a recent paper Konrad and Thum (2014) present a model that shows that unilateral pre-commitment reduces the likelihood of agreement in bilateral negotiations over the provision of a public good when parties have private information over their contribution costs. We test the model in a laboratory experiment paying particular attention to how behavioral motivations other than payoff-maximization affect the strength of the model’s result. We find that the result is no longer statistically significant when we allow for non-payoff-maximizing behavior at each stage of the game. Introducing communication has an interesting effect as it influences different forms of non-payoff-maximizing behavior asymmetrically and leads to the model’s result again becoming significant. All in all, we find strong experimental support for Konrad and Thum’s model even though we observe considerable amounts of non-payoff-maximizing behavior that is not accounted for in the original model.

Suggested Citation

  • Sönke Hoffmann & Benedikt Mihm & Joachim Weimann, 2014. "To Commit or not to Commit? An Experimental Investigation of Pre-Commitments in Bargaining Situations with Asymmetric Information," CESifo Working Paper Series 4835, CESifo.
    • Handle: RePEc:ces:ceswps:_4835
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    More about this item

    Keywords

    pre-commitments; bargaining; asymmetric information; social preferences;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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