Bargaining in the Shadow of Uncertainty

Marina Agranov, Hülya Eraslan and Chloe Tergiman

American Economic Journal: Microeconomics, 2024, vol. 16, issue 4, 229-58

Abstract: In bargaining environments with stochastic future surplus, failing to delay agreement can be inefficient when the expected future surplus is sufficiently high. Theoretically, such inefficiencies never arise under unanimity rule but can arise under majority rule. Using a laboratory experiment, we find support for these predictions, both when the unanimity rule is predicted to be more efficient and when there should be no difference between the two rules. We also find large point prediction deviations under the majority rule. We show these deviations can be explained by higher-than-predicted egalitarian sharing and a lower risk of being excluded from future agreements.

JEL-codes: C78 C92 D71 D81 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/mic.20220327

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