An Experimental Test of Rubinstein's Theory of Bargaining

Janet Neelin, Hugo Sonnenschein and Matthew Spiegel
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Janet Neelin: Princeton University
Matthew Spiegel: Princeton University
Authors registered in the RePEc Author Service: Janet Currie

No 587, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: This note reports the results of an experiment which was designed to test Rubinstein's(1982) theory of bargaining. We were particularly interested in how it would compare with the hypothesis that bargainers tend to split a pie 50-50. We duplicated Binmore, Shaked and Sutton's(1986) result that the equal split hypothesis is rejected in a two round game with alternating offers. However, we show that in similar games with more than two rounds Rubinstein's theory is also rejected. Thus their conclusion, that subjects behave as "gamesmen" (i.e. in a manner consistent with the predictions of game theory), was premature. In experiments with varying numbers of rounds, our first players consistently offered their opponents shares equal to the value of the second round pie. In a two round game this behaviour by definition yields offers consistent with Rubinstein's theory. In games with more rounds it does not. In each game, the majority of first players chose to make the same offer. In fact, the regularity of their behaviour is perhaps our strongest result. While neither Rubinstein's theory nor the equal split model explain our findings, the regularity of our subjects' behaviour suggests that there is hope of finding a model of bargaining which does.

Keywords: Rubenstein; bargaining; experiment; game theory (search for similar items in EconPapers)
JEL-codes: D31 (search for similar items in EconPapers)
Date: 1986-05
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