Focal points in tacit bargaining problems: Experimental evidence

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

European Economic Review, 2013, vol. 59, issue C, 167-188

Abstract: We use a new experimental design to test Schelling's hypotheses about the nature and effectiveness of focal points in tacit bargaining problems. In our design, as in many real-world bargaining problems, each player's strategies are framed as proposals about what part of a stock of valuable objects she is to take, and there are payoff-irrelevant cues which define relations between players and objects. In line with Schelling's hypotheses, we find that such cues serve as powerful focal points. Their presence increases efficiency even in games where there is no efficient and equal division, and induces systematically unequal payoff distributions.

Keywords: Tacit bargaining; Relational cue; Payoff-irrelevant cue; Focal point (search for similar items in EconPapers)
JEL-codes: C72 C78 C91 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:59:y:2013:i:c:p:167-188

DOI: 10.1016/j.euroecorev.2012.12.005

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