Experiments on Agenda Setting, Bracketing, Power, and Responsibility Exchange in Bargaining
Saturday, Jan. 7, 2017 7:30 PM – 9:30 PM
- Chair: Emin Karagozoglu, Bilkent University
Bargaining Power and Endogenous Surplus: An Experimental Study
AbstractThis paper reports the results of a bargaining model that provides agents with a choice between production and protection in a setting with a winner-take-all disagreement point, and then examines this model by conducting a laboratory experiment. Using different endowments and different contest success functions, we find that most agents over-invest in preparing for disagreement. Additionally, we find that many agents compromise rather than engage in conflict, even when it is more profitable to do so.
Responsibility Exchange Theory: A Theoretical Model of Thanking, Apologizing, Bragging, and Blaming
AbstractJudges anecdotally report that many of the small claims disputes that are brought before them have as a key feature that one party to the dispute either failed to apologize for an adverse outcome or failed to thank for a favorable outcome. Indeed, alternative dispute resolution strategies that encourage communication and "early apology" before conflicts move to the courtroom can help boost the number of cases that avoid litigation (Sohn and Bal, 2012). Studies of medical malpractice suits find that an apology from the physician, which is mostly thought to lead to increased liability, can actually significantly reduce settlement amounts and the time in which settlements are made (Ho and Liu, 2011). Furthermore, the majority of aggression in the workplace is of a verbal, subtle kind termed "incivility" (Baron and Neuman, 1996; Andersson and Pearson, 1999), which includes neglecting to say thank-you, and more serious forms of aggression are almost always preceded by such acts of incivility. In this paper, we introduce and test a theory to explain why apologies and expressions of thanks are so important in these types of interactions. Additionally, the theory draws a close connection between apologizing and thanking on the one hand, and blaming and bragging (that is, taking credit for one one's own positive action) on the other hand. We test the theory using a variety of methodologies including qualitative interviews, hypothetical scenario studies, and experimental negotiations.
When the Going Gets Tough or Easy in Bargaining
AbstractSame economic actors periodically bargain over the division of resources. The value of the stake in these negotiations almost never remains constant over time. In contexts that involve periodic negotiations (e.g., contract negotiations), reference points based on performance and precedents, and exogenously/stochastically varying stakes, should economic actors bargain over the whole pie or should they bargain over the amount of change with respect to the old pie size? Moreover, do subjective entitlements and/or bargaining behavior/outcomes differ when negotiations are made over losses rather than gains? In order to answer these questions, we use a 2X2 experimental design, where the size of a bargaining pie (stochastically) changes compared to its status quo level and we investigate the influence of bracketing (narrow or large) on the one hand, and the issue at stake (gains or losses) on bargaining parties' entitlements and bargaining behavior. Our experimental design uses an unstructured bargaining protocol, which allows us to study opening offers, concession behavior, duration, and agreement terms. For both manipulations, we observe systematic effects on subjective entitlements, opening proposals, and agreements. Most interestingly, narrow bracketing leads to agreement payoffs even more asymmetric than what the reference point implies and it favors those players who were already favored by the reference point present in the environment.
- C7 - Game Theory and Bargaining Theory
- C9 - Design of Experiments