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Bargaining and reputation: an experiment on bargaining in the presence of behavioural types
journal contribution
posted on 2023-06-08, 23:12 authored by Matthew EmbreyMatthew Embrey, Guillaume R Fréchette, Steven F LehrerWe conduct a series of laboratory experiments to understand what role commitment and reputation play in bargaining. The experiments implement the Abreu and Gul (2000) bargaining model that demonstrates how introducing behavioral types, which are obstinate in their demands, creates incentives for all players to build reputations for being hard bargainers. The data are qualitatively consistent with the theory, as subjects mimic induced types. Furthermore, we find evidence for the presence of complementary types, whose initial demands acquiesce to induced behavioural demands. However, there are quantitative deviations from the theory: subjects make aggressive demands too often and participate in longer conflicts before reaching agreements. Overall, the results suggest that the Abreu and Gul (2000) model can be used to gain insights to bargaining behavior, particularly in environments where the process underlying obstinate play is well established.
History
Publication status
- Published
File Version
- Accepted version
Journal
Review of Economic StudiesISSN
0034-6527Publisher
Oxford University PressExternal DOI
Issue
2Volume
82Page range
608-631Department affiliated with
- Economics Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2015-11-16First Open Access (FOA) Date
2016-12-15First Compliant Deposit (FCD) Date
2016-12-15Usage metrics
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