Paper #284

Title:

Bargaining efficiency and screening: An experimental investigation

Author:

Gary Charness

Date:

January 1998

Abstract:

This paper investigates whether information about fairness types can be useful in lowering dispute costs and enhancing bargaining efficiency. An experiment was conducted in which subjects were first screened using a dictator game, with the allocations chosen used to separate participants into two types. Mutually anonymous pairs of subjects then bargained, with a dispute cost structure imposed. Sorting with identification reduces dispute costs; there are also significant differences in bargaining efficiency across pairing types. Information about types is crucial for these differences and also strongly affects the relative bargaining success of the two types and the hypothetical optimal bargaining strategy.

Keywords:

Bargaining efficiency, dispute resolution, experiment, fairness, sorting, Leex

JEL codes:

J52, C91, C78

Area of Research:

Behavioral and Experimental Economics

Published in:

Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 285-304, July 2000

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