Focal points in tacit bargaining problems: Experimental evidence

A. Isoni, A. Poulsen, R. Sugden, K. Tsutsui

Research output: Contribution to journalArticle

33 Citations (Scopus)

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. © 2013 Elsevier B.V.
Original languageEnglish
Pages (from-to)167-188
Number of pages22
JournalEuropean Economic Review
Volume59
DOIs
Publication statusPublished - 1 Apr 2013

Keywords

  • Tacit bargaining
  • Relational cue
  • Payoff-irrelevant cue
  • Focal point

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