An Internet Experiment on Bargaining in Networks

Abstract

Exchange networks model the behavior of a set of players who need to reach pairwise agreements for mutual benefit, as in the labor market, the housing market and the "market" for social relationships. We describe internet-based experiments on bargaining in networks, that are the largest such experiments to date. Our results include some of the first insights into the dynamics of bargaining, with evidence that agents learn the power of their position in the network over time. Our analysis includes a new approach to predicting player earnings in exchange networks.

Keywords: Bargaining, exchange networks, matching

JEL Classification: C78, C90