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Equal Splits or Product Prices: An Experiment

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Author Info

  • Holm, Håkan J.

    ()
    (Department of Economics, Lund University)

  • Svensson, Emma

    ()
    (Department of Economics, Lund University)

Abstract

This paper compares the choice of focal points in a Nash Demand Game embedded in an abstract frame with the corresponding choices in a game with a real product frame where parties bargain for a well-known consumer product. We find that the frame has a substantial impact on the fraction of subjects choosing the equal split outcome casting doubt on the robustness of this solution in bargaining over real goods. The paper shows that there is notable heterogeneity among subjects with regard to their choices of focal points and reports individual characteristics predicting these choices.

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File URL: http://project.nek.lu.se/publications/workpap/papers/WP11_16.pdf
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Bibliographic Info

Paper provided by Lund University, Department of Economics in its series Working Papers with number 2011:16.

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Length: 23 pages
Date of creation: 02 May 2011
Date of revision: 22 Apr 2013
Handle: RePEc:hhs:lunewp:2011_016

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Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/en
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Related research

Keywords: focal points; Nash Demand Game; heterogeneity; framing; equilibrium selection;

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  1. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2008. "Belief Elicitation in Experiments: Is there a Hedging Problem?," IZA Discussion Papers 3517, Institute for the Study of Labor (IZA).
  2. Bergman, Oscar & Ellingsen, Tore & Johannesson, Magnus & Svensson, Cicek, 2010. "Anchoring and cognitive ability," Economics Letters, Elsevier, vol. 107(1), pages 66-68, April.
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