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Communication in multilateral bargaining

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  • Agranov, Marina
  • Tergiman, Chloe

Abstract

One of the most robust phenomena in the experimental literature on multilateral bargaining is the failure of proposers to extract equilibrium rents. However, all previous experiments have overlooked the fact that outside the lab committee members are allowed to – and do – engage in sometimes intense communication processes prior to voting on a proposal. We conduct an experimental test of the Baron–Ferejohn model in which we allow committee members to engage in unrestricted cheap-talk communication before a proposal is submitted. We find that proposers extract a significantly higher share of resources when communication is allowed. Communication increases proposer power through two channels. First, it mitigates the uncertainty surrounding the amount a coalition member is willing to accept. Second, it allows potential coalition members to compete for a place in the coalition by lowering this stated price.

Suggested Citation

  • Agranov, Marina & Tergiman, Chloe, 2014. "Communication in multilateral bargaining," Journal of Public Economics, Elsevier, vol. 118(C), pages 75-85.
  • Handle: RePEc:eee:pubeco:v:118:y:2014:i:c:p:75-85
    DOI: 10.1016/j.jpubeco.2014.06.006
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:gamebe:v:107:y:2018:i:c:p:60-92 is not listed on IDEAS
    2. Nunnari, Salvatore & Zapal, Jan, 2016. "Gambler's fallacy and imperfect best response in legislative bargaining," Games and Economic Behavior, Elsevier, vol. 99(C), pages 275-294.
    3. Baron, David P. & Bowen, T. Renee & Nunnari, Salvatore, 2017. "Durable coalitions and communication: Public versus private negotiations," Journal of Public Economics, Elsevier, vol. 156(C), pages 1-13.
    4. repec:spr:jesaex:v:3:y:2017:i:1:d:10.1007_s40881-017-0038-x is not listed on IDEAS
    5. Marina Agranov & Chloe Tergiman, 2019. "Communication in bargaining games with unanimity," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 350-368, June.
    6. Miller, Luis & Montero, Maria & Vanberg, Christoph, 2018. "Legislative bargaining with heterogeneous disagreement values: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 107(C), pages 60-92.
    7. Werner, Peter, 2019. "Wage negotiations and strategic responses to transparency," Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203567, Verein für Socialpolitik / German Economic Association.
    8. Maaser, Nicola & Traub, Stefan & Paetzel, Fabian, 2017. "Power illusion in coalitional bargaining: An experimental analysis," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168155, Verein für Socialpolitik / German Economic Association.
    9. Dechenaux, Emmanuel & Mago, Shakun D., 2019. "Communication and side payments in a duopoly with private costs: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 157-184.
    10. Cesar Martinelli & Thomas R. Palfrey, 2017. "Communication and Information in Games of Collective Decision: A Survey of Experimental Results," Working Papers 1065, George Mason University, Interdisciplinary Center for Economic Science.
    11. Klaus Abbink & Lu Dong & Lingbo Hugang, 2018. "Talking Behind Your Back: Asymmetric Communication in a Three-person Dilemma," Discussion Papers 2018-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. repec:eee:poleco:v:56:y:2019:i:c:p:90-102 is not listed on IDEAS
    13. Daniela Glätzle-Rützler & Philipp Lergetporer & Matthias Sutter, 2019. "Collective intertemporal decisions and heterogeneity in groups," Working Papers 2019-10, Faculty of Economics and Statistics, University of Innsbruck.
    14. Miller, Luis & Vanberg, Christoph, 2015. "Group size and decision rules in legislative bargaining," European Journal of Political Economy, Elsevier, vol. 37(C), pages 288-302.
    15. Bradfield, Anthony J. & Kagel, John H., 2015. "Legislative bargaining with teams," Games and Economic Behavior, Elsevier, vol. 93(C), pages 117-127.
    16. repec:eee:gamebe:v:117:y:2019:i:c:p:433-450 is not listed on IDEAS
    17. Christiansen, Nels, 2015. "Greasing the wheels: Pork and public goods contributions in a legislative bargaining experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 64-79.
    18. Vespa, Emanuel I., 2016. "Malapportionment and multilateral bargaining: An experiment," Journal of Public Economics, Elsevier, vol. 133(C), pages 64-74.
    19. Chloe Tergiman, 2015. "Institution design and public good provision: an experimental study of the vote of confidence procedure," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 697-717, December.
    20. Cabrales, Antonio & Drouvelis, Michalis & Gurguc, Zeynep & Ray, Indrajit, 2018. "Do we need to listen to all stakeholders?: communicating in a coordination game with private information," Cardiff Economics Working Papers E2018/23, Cardiff University, Cardiff Business School, Economics Section.
    21. repec:eee:gamebe:v:107:y:2018:i:c:p:93-108 is not listed on IDEAS

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