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Bargaining efficiency and screening: An experimental investigation

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  • Gary Charness

Abstract

This paper investigates whether information about fairness types can be useful in lowering dispute costs and enhancing bargaining efficiency. An experiment was conducted in which 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 and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 284.

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Date of creation: Jan 1998
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Handle: RePEc:upf:upfgen:284

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Web page: http://www.econ.upf.edu/

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Keywords: Bargaining efficiency; dispute resolution; experiment; fairness; sorting; Leex;

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  8. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  9. Yang, Bill Z., 1996. "Litigation, experimentation, and reputation," International Review of Law and Economics, Elsevier, Elsevier, vol. 16(4), pages 491-502, December.
  10. 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.
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Cited by:
  1. Charness, Gary B & Corominas-Bosch, Margarida & FRECHETTE, GUILLAUME, 2005. "Bargaining and Network Structure: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt7v98682v, Department of Economics, UC Santa Barbara.
  2. 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.
  3. 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.
  4. Servátka, Maros, 2010. "Does generosity generate generosity? An experimental study of reputation effects in a dictator game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 39(1), pages 11-17, January.
  5. Bohnet, Iris & Kubler, Dorothea, 2005. "Compensating the cooperators: is sorting in the prisoner's dilemma possible?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 56(1), pages 61-76, January.
  6. 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.
  7. Eva Ranehill & Frédéric Schneider & Roberto A. Weber, 2014. "Growing Groups, Cooperation, and the Rate of Entry," CESifo Working Paper Series 4719, CESifo Group Munich.
  8. 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.
  9. Croson, Rachel & Konow, James, 2009. "Social preferences and moral biases," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 69(3), pages 201-212, March.

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