Two Person Bargaining Mechanisms: A Laboratory Experiment

• Published in: Group decision and negotiation Vol. 31; no. 6; pp. 1145 - 1177
• Main Authors: Bol, Damien, Laslier, Jean-François, Núñez, Matías
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.12.2022; Springer Nature B.V; INFORMS
• Subjects: Advantages; Bargaining; Biological and Physical Anthropology; Business and Management; Efficiency; Experiments; Humanities and Social Sciences; Inequality; Laboratories; Symmetry; Vetoes; D7; C78; Experiments; Bargaining; Consensus; Inequality
• ISSN: 0926-2644; 1572-9907
• DOI: 10.1007/s10726-022-09793-y

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.