Two Person Bargaining Mechanisms: A Laboratory Experiment

Damien Bol; Jean-François Laslier; Matias Nunez

doi:10.1007/s10726-022-09793-y

Two Person Bargaining Mechanisms: A Laboratory Experiment

Damien Bol, Jean-François Laslier, Matias Nunez

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Abstract

We conduct a series of experiments in which two subjects bargain over five options. Following an experimental design closely related to De Clippel et al. (Am Econ Rev 104:3434–3458, 2014), we evaluate the performance of three bargaining mechanisms: (α) one subject shortlists a block of three options before the other chooses one among them, (β) both subjects veto options simultaneously and in a block, and (γ) both subjects veto options simultaneously and gradually one after the other. We document that the non-symmetric shortlisting mechanism (α) is highly efficient, but our data also suggest the existence of a first-mover advantage as subjects become more experienced. The simultaneous mechanism (β) is less efficient than (α) and generates a high level of ex-post inequality. The gradual veto mechanism (γ) is no less efficient than (α), but has the important advantage of shutting down the possibility of any first-mover advantage.

Original language	English
Pages (from-to)	1145-1177
Number of pages	33
Journal	GROUP DECISION AND NEGOTIATION
Volume	31
Issue number	6
Early online date	6 Sept 2022
DOIs	https://doi.org/10.1007/s10726-022-09793-y
Publication status	Published - Dec 2022

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abstract = "We conduct a series of experiments in which two subjects bargain over five options. Following an experimental design closely related to De Clippel et al. (Am Econ Rev 104:3434–3458, 2014), we evaluate the performance of three bargaining mechanisms: (α) one subject shortlists a block of three options before the other chooses one among them, (β) both subjects veto options simultaneously and in a block, and (γ) both subjects veto options simultaneously and gradually one after the other. We document that the non-symmetric shortlisting mechanism (α) is highly efficient, but our data also suggest the existence of a first-mover advantage as subjects become more experienced. The simultaneous mechanism (β) is less efficient than (α) and generates a high level of ex-post inequality. The gradual veto mechanism (γ) is no less efficient than (α), but has the important advantage of shutting down the possibility of any first-mover advantage.",

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note = "Funding Information: We would like to thank Kfir Eliaz, Remzi Sanver, and Marie-Claire Villeval for useful remarks, as well as seminar participants in Berlin and Montpellier. This paper also benefited from comments and remarks from three anonymous referees. Financial support from the projects IDEX ANR-10-IDEX-0001-02 PSL MIFID, ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047 and EUR grant ANR-17-EURE-0001 is gratefully acknowledged. Funding Information: We would like to thank Kfir Eliaz, Remzi Sanver, and Marie-Claire Villeval for useful remarks, as well as seminar participants in Berlin and Montpellier. This paper also benefited from comments and remarks from three anonymous referees. Financial support from the projects IDEX ANR-10-IDEX-0001-02 PSL MIFID, ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047 and EUR grant ANR-17-EURE-0001 is gratefully acknowledged. Publisher Copyright: {\textcopyright} 2022, The Author(s), under exclusive licence to Springer Nature B.V.",

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Two Person Bargaining Mechanisms: A Laboratory Experiment

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