Walking the Talk in Multiparty Bargaining: An Experimental Investigation

28 Pages Posted: 13 Nov 2009

See all articles by Kathleen McGinn

Kathleen McGinn

Harvard Business School - Negotiation, Organizations & Markets Unit

Katherine L. Milkman

University of Pennsylvania - The Wharton School

Markus Noeth

University of Hamburg

Date Written: November 12, 2009

Abstract

We study the framing effects of communication in multiparty bargaining. Communication has been shown to be more truthful and revealing than predicted in equilibrium. Because talk is preference-revealing, it may effectively frame bargaining around a logic of fairness or competition, moving parties on a path toward or away from equal-division agreements. These endogenous framing effects may outweigh any overall social utility effects due to the mere presence of communication. In two experiments, we find that non-binding talk of fairness within a three-party, complete-information game leads toward off-equilibrium, equal division payoffs, while non-binding talk focusing on competitive reasoning moves parties away from equal divisions. Our two studies allow us to demonstrate that spontaneous within-game dialogue and manipulated pre-game talk lead to the same results.

Keywords: communication, fairness, bargaining

JEL Classification: C72, C78, D03, D74

Suggested Citation

McGinn, Kathleen L. and Milkman, Katherine L. and Noeth, Markus, Walking the Talk in Multiparty Bargaining: An Experimental Investigation (November 12, 2009). Harvard Business School NOM Unit Working Paper No. 10-039. Available at SSRN: https://ssrn.com/abstract=1504923 or http://dx.doi.org/10.2139/ssrn.1504923

Kathleen L. McGinn (Contact Author)

Harvard Business School - Negotiation, Organizations & Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6901 (Phone)
617-496-7379 (Fax)

Katherine L. Milkman

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104
United States

Markus Noeth

University of Hamburg ( email )

Chair of Banking and Behavioral Finance
WiSo
Hamburg, 20146
Germany
+49-40-42838 3337 (Phone)
+49-40-42838 5512 (Fax)

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