Demonstration of power: Experimental results on bilateral bargaining

Noemí Navarro, Róbert F. Veszteg

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We test the empirical effectiveness of two theoretical proposals to equilibrate bargaining power in bilateral bargaining. Our experimental design is based on the two-player versions of the multibidding game (Pérez-Castrillo & Wettstein, 2001) and the bid-and-propose game (Navarro & Perea, 2005). Both models build on the ultimatum game and balance parties' bargaining power by auctioning the role of the proposer in the first stage. We find that proposers learn how to send an acceptable proposal by trial and error, guided by responders' rejections. The observed behavior stabilizes for the final experimental rounds and the payoff gap between the proposer and the responder seems to close down. However, the strategies chosen by subjects are remarkably different from the theoretical ones.

Original languageEnglish
Pages (from-to)762-772
Number of pages11
JournalJournal of Economic Psychology
Volume32
Issue number5
DOIs
Publication statusPublished - 2011 Oct 1
Externally publishedYes

Keywords

  • Bargaining
  • Experiments
  • Fairness
  • Myerson value
  • Shapley value

ASJC Scopus subject areas

  • Sociology and Political Science
  • Applied Psychology
  • Economics and Econometrics

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