Bargaining Dynamics and Allocation Choices

Dorothea K Herreiner, Economics Department, Loyola Marymount University

Abstract:
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".