Efficiency, Equality, and Labeling: An Experimental Investigation of Focal Points in Explicit Bargaining

Andrea Isoni (), Anders Poulsen (), Robert Sugden and Kei Tsutsui

American Economic Review, 2014, vol. 104, issue 10, 3256-87

Abstract: We investigate Schelling's hypothesis that payoff-irrelevant labels ("cues") can influence the outcomes of bargaining games with communication. In our experimental games, players negotiate over the division of a surplus by claiming valuable objects that have payoff-irrelevant spatial locations. Negotiation occurs in continuous time, constrained by a deadline. In some games, spatial cues are opposed to principles of equality or efficiency. We find a strong tendency for players to agree on efficient and minimally unequal payoff divisions, even if spatial cues suggest otherwise. But if there are two such divisions, cues are often used to select between them, inducing distributional effects.

JEL-codes: C78 D63 D83 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.10.3256
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Citations: View citations in EconPapers (50)

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