The Agent-Selection Dilemma in Distributive Bargaining

Principals often bargain through agents, and past work suggests that such bargaining too often ends in costly impasse. We present experimental evidence that the agent-selection process which precedes bargaining may be a significant driver of failures to reach agreement. We find that principals select overly aggressive agents, such that those sent to the bargaining table are more polarized in their views than are potential agents in general. Agent-selection makes parties worse off than if they were assigned an agent at random and, conditional on engaging in agent-selection, both parties could improve their outcome by selecting a less aggressive agent.