Bargaining and reputation

An experiment on bargaining in the presence of behavioural types

Matthew Embrey, Guillaume Frechette, Steven F. Lehrer

    Research output: Contribution to journalArticle

    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 behavioural 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.

    Original languageEnglish (US)
    Article numberrdu029
    Pages (from-to)608-631
    Number of pages24
    JournalReview of Economic Studies
    Volume82
    Issue number2
    DOIs
    StatePublished - Aug 1 2013

    Fingerprint

    Experiment
    Laboratory experiments
    Deviation
    Bargaining model
    Incentives

    Keywords

    • Bargaining
    • Experiment
    • Reputation

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Bargaining and reputation : An experiment on bargaining in the presence of behavioural types. / Embrey, Matthew; Frechette, Guillaume; Lehrer, Steven F.

    In: Review of Economic Studies, Vol. 82, No. 2, rdu029, 01.08.2013, p. 608-631.

    Research output: Contribution to journalArticle

    Embrey, Matthew ; Frechette, Guillaume ; Lehrer, Steven F. / Bargaining and reputation : An experiment on bargaining in the presence of behavioural types. In: Review of Economic Studies. 2013 ; Vol. 82, No. 2. pp. 608-631.
    @article{09539d65acce4b3fbf4fa72f3c3c5e1c,
    title = "Bargaining and reputation: An experiment on bargaining in the presence of behavioural types",
    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 behavioural 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.",
    keywords = "Bargaining, Experiment, Reputation",
    author = "Matthew Embrey and Guillaume Frechette and Lehrer, {Steven F.}",
    year = "2013",
    month = "8",
    day = "1",
    doi = "10.1093/restud/rdu029",
    language = "English (US)",
    volume = "82",
    pages = "608--631",
    journal = "Review of Economic Studies",
    issn = "0034-6527",
    publisher = "Oxford University Press",
    number = "2",

    }

    TY - JOUR

    T1 - Bargaining and reputation

    T2 - An experiment on bargaining in the presence of behavioural types

    AU - Embrey, Matthew

    AU - Frechette, Guillaume

    AU - Lehrer, Steven F.

    PY - 2013/8/1

    Y1 - 2013/8/1

    N2 - 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 behavioural 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.

    AB - 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 behavioural 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.

    KW - Bargaining

    KW - Experiment

    KW - Reputation

    UR - http://www.scopus.com/inward/record.url?scp=84926482505&partnerID=8YFLogxK

    UR - http://www.scopus.com/inward/citedby.url?scp=84926482505&partnerID=8YFLogxK

    U2 - 10.1093/restud/rdu029

    DO - 10.1093/restud/rdu029

    M3 - Article

    VL - 82

    SP - 608

    EP - 631

    JO - Review of Economic Studies

    JF - Review of Economic Studies

    SN - 0034-6527

    IS - 2

    M1 - rdu029

    ER -