Abstract

http://ssrn.com/abstract=1938474
 


 



Bargaining and Reputation: An Experiment on Bargaining in the Presence of Behavioral Types


Matthew Embrey


Maastricht University - Department of Economics

Guillaume R. Frechette


New York University (NYU) - Department of Economics

Steven F. Lehrer


Queen's University - School of Policy Studies; National Bureau of Economic Research (NBER)

April 1, 2014


Abstract:     
We 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 behavioral 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.

Number of Pages in PDF File: 38

Keywords: Bargaining, reputation, experiments

JEL Classification: C72, C78, C90

working papers series


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Date posted: October 5, 2011 ; Last revised: April 3, 2014

Suggested Citation

Embrey, Matthew and Frechette, Guillaume R. and Lehrer, Steven F., Bargaining and Reputation: An Experiment on Bargaining in the Presence of Behavioral Types (April 1, 2014). Available at SSRN: http://ssrn.com/abstract=1938474 or http://dx.doi.org/10.2139/ssrn.1938474

Contact Information

Matthew Embrey
Maastricht University - Department of Economics ( email )
P.O. Box 616
Maastricht, 6200 MD
Netherlands
HOME PAGE: http://www.maastrichtuniversity.nl/web/Main/Sitewide/Content/EmbreyMatthew.htm
Guillaume R. Frechette (Contact Author)
New York University (NYU) - Department of Economics ( email )
19 West Fourth St., 6th floor
New York, NY 10012
United States
HOME PAGE: http://https://files.nyu.edu/gf35/public/html/econ.htm
Steven F. Lehrer
Queen's University (Canada) - School of Policy Studies ( email )
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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