Bargaining Dynamics and Allocation Choices

Dorothea K Herreiner, Economics Department, Loyola Marymount University

We consider several bargaining experiments in which players determine an allocation of four indivisible goods. We show that the bargaining dynamics are relevant for the choice of a specific allocation. For instance, it matters for the agreement who first proposes a specific allocation - an "unequal" allocation is significantly more likely to be accepted if suggested by the disadvantaged person. We also show that non-binding communications influence the outcome of the game. We derive similar results with complete and incomplete information and compare them to a dictator-version of our experiments where no bargaining or communication is possible. Procedural aspects of free-form bargaining are shown to matter.

Keywords: Bargaining, Fairness
JEL Classification: C790, C910, D630

Current Version: June 2005.
An earlier version circulated under the title "Who Said It First? Procedural Aspects of Experimental Bargaining Games".