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We introduce the notion of limited consideration into a bilateral, infinite-horizon, alternating-offers bargaining game. Both agents have reference-dependent preferences, and their reference points are dynamically updated. An agent's current consideration set (or focus) is influenced by the last offer he rejected such that the most salient point in that consideration set becomes his current reference point. We provide an implicit characterization of stationary subgame perfect Nash equilibria in our model. Without resorting to asymmetric or incomplete information, we show that our bargaining game can produce delay and disagreement in equilibrium. In addition to analytical results on the disagreement conditions and the nature of agreements, we provide computational comparative statics on model parameters and study their impacts on delay. [ABSTRACT FROM AUTHOR]

Men and women negotiate differently, which might create gender inequality in earnings from bargaining. We study the role of gender and gender pairing in bilateral bargaining, using an artefactual field experiment in rural Uganda, in which pairs of participants bargain over the division of a fixed amount of resources. We vary the gender composition of the bargaining pairs as well as the disclosure of the participants' identities. We find gender differences in earnings and agreements, but only when identities and, thus, genders are disclosed. Women in same-gender pairs obtain higher final earnings than men and women in mixed-gender pairs, which is due to the lower likelihood of disagreement among women-only pairs. We identify gender differences in demands and demand inconsistency--the money left on the table once demands are corrected for beliefs about the counterpart's demand--as mechanisms behind the observed gender differences in bargaining outcomes. In addition, we find that gender differences in demand inconsistency are related to gender differences in education and a measure of expected generosity. [ABSTRACT FROM AUTHOR]

We study whether negotiators adopt commitment tactics in bargaining, a concept first proposed by Schelling (1956), and their choice of the credibility of commitment. In a modified ultimatum game experiment, the responder is allowed to pre-commit to a minimum acceptable offer (MAO) before an offer is proposed. Meanwhile, they choose the credibility of the commitment, measured by a cost of backing down (CBD) incurred if the responder accepts an offer lower than the MAO. We find that nearly 40% of responders chose a CBD substantially lower than their MAO, despite the fact that proposers were more likely to cave in and offer a larger share of the bargaining surplus when fully credible commitments were made. Informing responders of the proposers' minimum acceptable share of the bargaining surplus does not reduce partially credible commitments, suggesting that these commitments were unlikely made to enlarge the contract zone. Further treatments and analyses suggest that other-regarding preferences may be the reason behind partially credible commitments. [ABSTRACT FROM AUTHOR]

• The focusing effect can cause inefficient bargaining outcomes. • Certain issues may be inefficiently included or excluded from the final agreement. • An inefficient breakdown of negotiation is possible. • The players may decide to negotiate in stages by initially signing an incomplete agreement. • Negotiating in stages increases the efficiency of the negotiation. Two players with preferences distorted by the focusing effect (Kőszegi and Szeidl, 2013) negotiate an agreement over several issues and one transfer. We show that, as long as their preferences are differentially distorted, an issue will be inefficiently left out of the agreement or inefficiently included in the agreement whenever the importance of the other issues on the table is sufficiently large. Anticipating this possibility, the negotiating parties may negotiate in stages, by first signing an incomplete agreement and later finalizing the outcome of the negotiation. Negotiating in stages increases the efficiency of the negotiation, despite the fact that the players' preferences are distorted by the focusing effect also when negotiating the incomplete agreement. [ABSTRACT FROM AUTHOR]

• Insufficient sleep is commonplace and affects decision making in many settings. • We experimentally manipulated sleep levels for 7 days prior to zero-sum bargaining. • Uncertainty at impasse, such as with arbitration, promotes optimistic bargainers. • Bargainers increasingly depend on arbitration once used—the narcotic effect. • Sleep restricted bargainers experience a stronger narcotic effect. Insufficient sleep is commonplace, and understanding how this affects interpersonal conflict holds implications for personal and workplace settings. We experimentally manipulated participant sleep state for a full week prior to administering a stylized bargaining task that models payoff uncertainty at impasse with a final-offer arbitration (FOA) procedure. FOA use in previous trials decreases the likelihood of voluntary settlements going forward—the narcotic effect. We also report a novel result that a significantly stronger narcotic effect is estimated for more sleepy bargaining pairs. One implication is that insufficient sleep predicts increased dependency on alternatives to voluntarily resolution of interpersonal conflict. [ABSTRACT FROM AUTHOR]

I study the evolutionary stability of behavioural rules in a bargaining game. Each individual bargains in a pairwise manner with all other individuals over the division of a pie of fixed size by claiming a share for himself; individuals in a pair receive their respective claims if and only if the sum of the claims does not exceed unity. Each individual is associated with a behavioural rule which determines the share he chooses to claim. A behavioural rule is a correspondence that maps from a set of demands that were claimed by individuals in the recent history of the game into a set of shares, and each share in the latter set is chosen by the individual with positive probability. The evolutionary fitness of a behavioural rule is determined by the shares obtained by individuals who follow that particular rule, and fitter behavioural rules are selected over rules that are less fit. A state, i.e. a profile of claims made by the individuals in the population, is defined to be stable (neutrally stable) if the population continues to be comprised only of the incumbent behavioural rules (all incumbent behavioural rules continue to exist) even in the face of an appearance of a mutant behavioural rule. I formalise this in terms of two conditions. Firstly, internal stability requires the incumbent behavioural rules in the population to be equally fit. Secondly, external stability (neutral external stability) requires incumbent behavioural rules to be fitter (to not be less fit) than any mutant behavioural rule. I show that: (i) a necessary condition for stability of a state is that the state must be such that each individual responds by claiming a time-invariant share of the pie, and (ii) the state where all individuals demand half of the pie is the only state that is both internally stable and neutrally externally stable. [ABSTRACT FROM AUTHOR]

We experimentally study a situation in which two players negotiate the dissolution of a risky partnership. In our experiments, subjects must simultaneously negotiate both a selling price and the identity of the buyer. Upon reaching an agreement, one party (the buyer) will be subject to ex post risk, while the other party (the seller) will not, and the negotiation determines which party will hold the risk. Our results show that buyers extract a premium which is increasing in the riskiness of the partnership value distribution. Moreover, during bargaining, the majority of subjects make offers in which they would be the buyer (and thus exposed to risk) if the offer is accepted. Allowing subjects to communicate has noticeable effects: agreements are significantly more frequent and sorting according to fairness ideas – such that the buyer is the player with the higher "fair price" – is more frequent. We also show that, when subjects are able to communicate, bargaining pairs who discuss risk exposure or fairness generally agree to a lower price, giving greater compensation to risk for the buyer. [ABSTRACT FROM AUTHOR]

• We conduct a natural field experiment on eBay.de. • Amazon gift cards of different nominal values are offered via "Buy-it-Now or Best-Offer" format. • Buyers' behaviour is insensitive to the size of stakes or public information. • We use a novel statistical approach to recover the information about intentions of buyers when they make their initial offer for a gift card. • The observed distribution of offers is decomposable into two underlying distributions - a distribution of shares of surplus offered by buyers to the sellers and a distribution of buyers' beliefs about sellers' outside options. • The experimental data is consistent with the buyers offering one quarter of the trade surplus to the seller on average. We study the division of trade surplus in a natural field experiment on German eBay. Acting as a seller, we offer Amazon gift cards with face values between 5 and 500 Euro. eBay users, the subjects of our experiment, make price offers according to the Buy-it-Now or Best Offer trading protocol. Using a novel decomposition method, we infer the trade surplus from the data and find that on average the buyers offer one quarter of the surplus to the seller. Additionally, we document: (i) insignificant effects of stake size; (ii) poor use of strategically relevant public information; and (iii) differences between East and West German subjects. [ABSTRACT FROM AUTHOR]

The study of warfare is one of the oldest and most important dynamics of interest for students of politics. This area of research is predominantly − but not exclusively − undertaken within the sub-field of international relations (IR). IR theorists argue that war is the contingent outcome of the interaction among variables operating at three "levels of analysis": the international level, the domestic level, and the individual level. The international level explores variables that operate exclusively "above" states such as anarchy and the distribution of power. The domestic level explores variables that operate exclusively within states, such as regime type and bureaucratic design. The individual level explores the ways in which individual psychology (i.e. beliefs, culture, personality) contributes to the outbreak of war. We also offer a discussion of new puzzles and challenges in the study of warfare, such as the decline of war hypothesis and the growing prevalence of civil war, insurgency and non-state violence. [ABSTRACT FROM AUTHOR]

• We study the Ultimatum Game with proposers either earning their role or not. • An entitlement effect – proposers earning the role being less generous – is believed to exist. • We conduct three experiments with 1,254 participants. • The entitlement effect fails to replicate in all three experiments, and in the pooled data. Since the seminal paper of Hoffman et al. (1994), an entitlement effect is believed to exist in the Ultimatum Game, in the sense that proposers who have earned their role (as opposed to having it randomly allocated) offer a smaller share of the pie to their matched responder. The entitlement effect is at the core of experimental Public Choice – not just because it concerns the topics of bargaining and negotiations, but also because it relates to the question about under which circumstances actors behave more rational. We conduct three experiments, two in the laboratory and one online, with more than 1,250 participants. Our original motivation was to study gender differences, but ultimately we could not replicate the entitlement effect in the Ultimatum Game in any of our three experiments. Potential reasons for why the replication attempts fail are discussed. [ABSTRACT FROM AUTHOR]

The common use of majority rule in group decision making is puzzling. In theory, it inequitably favors the proposer, and paradoxically, it disadvantages voters further if they are inequity averse. In practice, however, outcomes are equitable. The present paper analyzes data from a novel experimental design to identify the underlying social preferences. Our experiment compares one-shot and indefinite horizon versions of random-proposer majority bargaining (the Baron-Ferejohn game) which allow us to disentangle behaviors compatible with altruism, inequity aversion, and reference dependent altruism. Most subjects are classified as reference-dependent altruists, around 10% are inequity averse. Subjects are egoistic when their payoff is below their reference point, they become efficiency concerned when satisfied, and the reference point is either the ex ante expectation or the opponent's payoff. Finally, we successfully test RDA out-of-sample on a number of distribution and bargaining games from three seminal social preference experiments. [ABSTRACT FROM AUTHOR]

• A modified ultimatum game is proposed to vary the balance of power between players through a probability that creates a convex combination of the dictator and ultimatum game. • Changes in nominal power affect what is perceived as a fair outcome of bilateral bargaining. • When the economic incentive of the proposer changes, common knowledge about power distribution is necessary for both parties to modify their distributive decisions. • Feedback on past decisions and outcomes is not required for subjects to act in response to variations in power; but it helps them fine-tune decisions to avoid money left on the table. Power, a fundamental characteristic of social interactions, characterizes one's ability to influence others. Fairness, inherently a type of social preference, impacts distributive decision-making. How does power shape the perceptions of fairness in economic interactions? While previous research finds that power holders tend to take more, it remains unclear whether they are driven by selfish motives to exploit weaker counterparts or act upon the belief that powerful individuals deserve more. With an innovative modified ultimatum game, we analytically and experimentally study how power interplays with fairness consideration to affect bilateral bargaining. We concentrate on behaviors by the responders, to elicit their fairness preferences in response to shifts in power. We find strong evidence that changes in power can modify what is perceived as a fair division in the modified ultimatum game, and thus influence the distributive behaviors and outcomes. However, such an effect only arises when there is common knowledge about the power distribution between the two parties prior to their decision-making. In addition, we find that, while feedback on past decisions and outcomes can help players fine-tune their choices to avoid money left on the table in bargaining, learning from experience is not required for power to take effect. [ABSTRACT FROM AUTHOR]

• Simultaneous commitments before bargaining lead to players making extreme threats. • Extreme threats threaten to reject all but the most advantageous offers. • Sequential commitments allow the first mover to make a moderate threat. • Moderate threats incentivize the second mover to not make an extreme threat. • Promises are useful if moderate threats are insufficient. If, prior to bargaining, bargainers can make commitments that have some chance of binding their bargaining behavior, they may want to threaten to reject low offers, promise to accept high offers, or both. We show that the timing of commitment attempts influences the goal of the commitments and the likelihood that incompatible threats result in impasse. Sequential commitments enable the player who commits first to make a moderate threat that convinces the second mover not to respond with a threat himself. The moderate threat requires a promise to not renege on the offer if the committed player would otherwise have incentives to deviate. This combination of tactics is not feasible when commitments are made simultaneously. [ABSTRACT FROM AUTHOR]

Highlights • Outcomes in multi-object auctions with uncertain post-auction resale markets are examined. • Theoretical results are tested using laboratory experiments. • Resale induces demand reduction by strong bidders in auctions, reducing auction efficiency. • In contrast to common arguments, resale does not always increase final efficiency. Abstract The possibility of resale affects efficiency in multi-object uniform-price auctions with asymmetric bidders. We theoretically show that when the exogenous probability of a resale market is sufficiently low, final efficiency is lower than in an auction without resale. Our experimental design consists of four treatments that vary the probability that bidders participate in a resale market. Resale always increases efficiency compared to the auction allocation, but it also induces demand reduction by high-value bidders, which reduces auction efficiency. Consistent with theory and in contrast to what is usually argued, the possibility of resale may reduce final efficiency and changes in the probability of resale have a non-monotonic effect on efficiency. We also analyze bargaining chat data to provide insights into the functioning of resale markets. [ABSTRACT FROM AUTHOR]

Highlights • Bargaining behavior over a jointly produced surplus is influenced by prior ownership and punishment ability. • Respect of prior ownership in bargaining depends on the strength of punishment. • Individuals with higher sensitivity to follow a costly rule are more likely to respect prior ownership. Abstract This paper examines the importance of prior ownership and punishment in bargaining over a jointly produced surplus. Using a laboratory experiment, participants jointly produce a surplus using a real effort task with the entire surplus given to the person who put in higher effort. Participants then bargain over the surplus in a series of ultimatum games. Treatments varied whether the proposer or responder received the surplus prior to bargaining and the threat point of the responder. The results suggest that proposers respect prior ownership when the responder has a strong ability to punish, but not when punishment is weak. Responders respect prior ownership when their ability to punish is weak, but reject at high rates when they have strong punishment. An independent measure of individual sensitivity to rule following can explain some of the results, adding support to the theory that individual behavior in bargaining is driven in part by adherence to social norms. [ABSTRACT FROM AUTHOR]

I develop a model of the multilateral negotiations that are frequently observed when one party wishes to trade with one of several others offering potentially different amounts of surplus to be split. The model’s intuitively sensible equilibrium outcomes differ qualitatively from those in other models of these negotiations. I demonstrate one application of the model that provides empirical predictions about how the choice of transacting via negotiations or auctions is affected by factors including the number of trading partners, uncertainty when making the choice, and costly participation in the trading process. More generally the model provides a tractable foundation for analyzing strategic problems in settings featuring multilateral negotiations, including investment, product design, mergers, and hold-up. [ABSTRACT FROM AUTHOR]

We study an alternating-offers, bilateral bargaining game where players may derive disutility from accepting shares below what they deem as fair. Moreover, we assume that the values they attach to fairness (i.e., their sensitivity to violations of their fairness judgments) decrease over time, as the deadline approaches. Our results offer a new explanation to delays and disagreements in dynamic negotiations. We show that even mutually compatible fairness judgments do not guarantee an immediate agreement. We partially characterize conditions for delay and disagreement, and study the changes in the length of delay in response to changes in the model parameters. [ABSTRACT FROM AUTHOR]

Alcohol drinking during business negotiation is a very common practice, particularly in some East Asian countries. Does alcohol consumption affect negotiator's strategy and consequently the outcome of the negotiation? If so, what is the mechanism through which alcohol impacts negotiator's behavior? We investigate the effect of a moderate amount of alcohol on negotiation using controlled experiments. Subjects are randomly matched into pairs to play a bargaining game with adverse selection. In the game, each subject is given a private endowment. The total endowment is scaled up and shared equally between the pair provided that they agree to collaborate. It is found that a moderate amount of alcohol consumption increases subjects’ willingness to collaborate, thus improving their average payoff. We find that alcohol consumption increases neither subjects’ preference for risk nor altruism. A possible explanation for the increase in the likelihood of collaboration is that subjects under the influence of alcohol are more “cursed” in the sense of Eyster and Rabin (2005) , which is supported by the estimation results of a structural model of quantal response equilibrium. [ABSTRACT FROM AUTHOR]

We study the timing of new technology adoption in markets with input outsourcing, and thus with vertical relations. We find that technology adoption can take place earlier when firms engage in input outsourcing than when they produce the input in-house. Hence, the presence of vertical relations can accelerate the adoption of a new technology. We also find that particular features of a vertically related market, such as the distribution of bargaining power and the contract type through which trading is conducted, can crucially affect the speed of technology adoption. [ABSTRACT FROM AUTHOR]

Arbitration, as an alternative to litigation for contract disputes, reduces costs and time. While it has frequently been thought of as a substitute to pretrial bargaining and litigation, in fact, parties may be able to reach a settlement privately while engaged in the arbitration process. Consequently, the institutional design may influence the bargaining. We develop a theoretical model of pre-arbitration bargaining that is able to identify the impact of the institutional features on its success. A detailed data set from arbitration proceedings in Italy is analyzed. The exogenous heterogeneity in the composition of the panel of arbitrators allows us to illustrate its effect on bargaining. We show that the number of arbitrators used interacts with their experience and independence to reduce uncertainty and facilitate settlement. [ABSTRACT FROM AUTHOR]

Although many real bargaining situations involve more than one person on each side of the bargaining table, much of the theoretical and experimental research concentrates on two single players. We study a simple extension: bilateral bargaining of four people (two two-person groups) with different patience. One might think that the outcome should depend only on the most patient members of each group. The impatient members agree anyway and are, hence, irrelevant. We find, however, that the less patient player has at least some impact on the outcome. As an explanation we suggest a decrease in uncertainty about responder behaviour if a group is clearly asymmetric. [ABSTRACT FROM AUTHOR]

While experimental research on social dilemmas focuses on the distribution of gains, we analyze social preferences in the case of losses. In this experimental study, the participants share a loss in a Nash bargaining game, but waiting time, instead of monetary losses, serves as an incentive. Further, we assume that the participants prefer less, rather than more, waiting time. Our experiment consists of four versions of the Nash bargaining game to allow for a comparison of four classical negotiation concepts (Nash, equal loss, equal gain, and Kalai–Smorodinsky) and an equal split of the overall waiting time. Our experimental evidence shows that an equal split better predicts the outcome of a Nash bargaining game involving losses than classical concepts do. Furthermore, the findings support that the participants resort to equal splits at the cost of their overall welfare. [ABSTRACT FROM AUTHOR]

Highlights: [•] We test social preference hypotheses on equity and competition on eBay. [•] Data finds a dichotomy between equitable bargaining and competitive bidding. [•] Behavioral patterns in the experiments mirror naturally occurring trading patterns. [ABSTRACT FROM AUTHOR]

Highlights: [•] We analyze Schelling's conjecture that ignorance might be strength. [•] Proposers who are kept ignorant almost always realize their most preferred option. [•] Using ignorance strategically pays if opponents are uncertain about intentions. [ABSTRACT FROM AUTHOR]

Abstract: Envy is often the cause of mutually harmful outcomes. We experimentally study the impact of envy in a bargaining setting in which there is no conflict in material interests: a proposer, holding the role of residual claimant, chooses the size of the pie to be shared with a responder, whose share is exogenously fixed. Responders can accept or reject the proposal, with game types differing in the consequences of rejection: all four combinations of (not) self-harming and (not) other-harming are considered. We find that envy leads responders to reject high proposer claims, especially when rejection harms the proposer. Notwithstanding, maximal claims by proposers are predominant for all game types. This generates conflict and results in a considerable loss of efficiency. [Copyright &y& Elsevier]

Abstract: A mechanism with low direct cost of use may be preferred to alternatives implementing more efficient allocations. We show this experimentally by giving pairs of subjects the option to agree on a single average price for a sequence of trades—in effect pooling several small bargains into a larger one. We make pooling costly by tying it to some inefficient trades, but subjects nevertheless reveal strong tendencies to pool, particularly when more bargains remain to be struck and when bargaining is face to face. The results suggest that implementation costs could play a significant role in the use of many common trading practices. [Copyright &y& Elsevier]

Abstract: This paper studies observable and irrevocable commitment in bargaining. We investigate when commitment tactics can cause an impasse and when compromise is feasible. In the static model in which a player’s commitment decision is made simultaneously with his choice of bargaining stance, compromise becomes unattainable (). We first analyze a static bargaining model, in which the players decide whether to attempt commitment after announcing their demands. In contrast to the aforementioned strong result, our model accommodates both incompatible commitments and compromises as equilibrium outcomes. We then extend our analysis to a dynamic setting. It is shown that compromise is possible if the players can alter their demands quickly and the chances of successful commitment are low. [Copyright &y& Elsevier]

Abstract: When a seller negotiates with multiple buyers, how does over-confidence affect the timing of trade? In this paper we distinguish between over-confidence about trade opportunities and over-confidence about the terms of trade. In bargaining environments without externalities both types of over-confidence can cause delays in agreement. If externalities are present the two forms of subjective bias have very different impacts on delay. In particular, over-confidence about trade opportunities may reduce bargaining delay. [ABSTRACT FROM AUTHOR]

Abstract: In this paper, we report on a series of free-form bargaining experiments in which two players have to distribute four indivisible goods among themselves. In one treatment, players are informed about the monetary payoffs associated with each bundle of goods; in a second treatment only the ordinal ranking of the bundles is given. We find that in both cases, inequality aversion plays a prominent role. In the ordinal treatment, individuals apparently use the ranks in the respective preference orderings over bundles of goods as a substitute for the unknown monetary value. Allocations that distribute the value (money or ranks, respectively) most equally serve as natural “reference points” for the bargaining processes. Frequently, such “equal split” allocations are chosen by our subjects even though they are Pareto dominated. Whether a Pareto optimal allocation is chosen or not depends on whether or not it is a Pareto improvement relative to the “equal split” reference allocation. We find less Pareto-damaging behavior due to inequality aversion in the ordinal than in the cardinal treatment. [ABSTRACT FROM AUTHOR]

Abstract: We consider production by a firm that relies on the patent rights that are held by other actors. Before production can take place, bargains have to be struck with each patent holder over the royalty per unit produced. In the negotiations, a patent holder must be mindful of the fact that a large royalty will increase the product price and lower demand for the final product. Hence each patent holder would prefer to gain a large royalty at the expense of rivals. When the producer makes the first offer in an alternating offer framework, we analyze whether it should conduct negotiations sequentially with some grouping of patent holders or simultaneously. We demonstrate that the producer will prefer simultaneous negotiation. An individual patent holder would prefer to negotiate early with the producer, and then to see remaining rights holders negotiate simultaneously. A firm that holds several patents would want to negotiate royalties on each one sequentially and then have simultaneous negotiation of payments to other rights holders. [Copyright &y& Elsevier]

Abstract: In an ultimatum bargaining experiment, we study how subjects bargain over the returns to their investments of money and time. The most notable finding is that a third of the subjects demand no compensation for their time investments, whereas almost all subjects demand compensation for equally costly monetary investments. [Copyright &y& Elsevier]

Abstract: This paper studies the strategic role of extremism within a two-country multi-stage game and shows that, in general, an equilibrium exists in which extremism is used by both rivals. We show that often changes in the environment affect the two countries differently. Specifically, as a country becomes wealthier, more powerful, or more democratic, its level of extremism decreases, but at the same time, its rival’s level of extremism increases. Similarly, higher stakes in the conflict tend to increase the level of extremism in the relatively poorer, weaker, and less democratic country, but decrease the level of extremism in the other country. On the other hand, higher stakes in a conflict between similar countries and greater destructiveness vis-à-vis the contested asset will increase the levels of extremism in both countries. Since changes in the environment may affect the levels of extremism in the two countries in opposite ways, we calculate the probability of an extremist destructive episode as a possible measure of the “aggregate” level of extremism in the conflict. We find that the aggregate level of extremism decreases with wealth, power, and degree of democracy, but increases with the stakes in the conflict and with better access to destructive technology. Finally, we use the model to examine levels of extremism within the context of the Israeli–Palestinian conflict. [Copyright &y& Elsevier]

Abstract: The question of how certain types of market-intermediating middlemen can be held in low regard is addressed. A model in which pure rent-seeking middlemen emerge endogenously is provided. Individuals differ according to their persuasiveness and according to their productivity. Those who are highly persuasive but relatively unproductive are the people most likely to become middlemen. However, only productivity differentials are shown to be essential for the emergence of middlemen. [Copyright &y& Elsevier]

Abstract: This paper studies a dynamic trade institution, where an auction is combined with a “Buy-It-Now” option. This option presents a take-it-or-leave-it price offered by the seller to a potential buyer before the auction. If the buyer rejects this buyout price, the object is auctioned off. In equilibrium, sales should take place only in the auction. An experimental test reveals that average buyout prices and profits are well captured by the theoretical prediction. However, a substantial amount of sales takes place before the auction. This is caused by offering (too) low or accepting (too) high buyout prices. We discuss alternative explanations such as risk preferences and (wrong) formation of beliefs that might account for agents’ behavior. [Copyright &y& Elsevier]

Abstract: We investigate the effect of anonymous communication on generosity in a dictator game. One-way written communication from the recipient is compared with no communication. Communication increases donations by more than 70 percent (p <0.05). To separate the effect of the content of the communication from the “relationship effect” of communication, a third treatment is carried out with one-way communication from third-parties (as messages from the recipients in the second treatment). In this third treatment, the donations are about 40 percent higher than in the treatment with no communication (p <0.10), suggesting that the impersonal content of the communication affects donations. [Copyright &y& Elsevier]

Abstract: This paper studies experimentally the impact of the split-award statute, where the state takes a share of the plaintiff''s punitive damage award, on litigation outcomes. Our findings indicate that dispute rates are significantly lower when bargaining is performed under the split-award institution. Defendants’ litigation losses and plaintiffs’ net compensation are significantly reduced by the split-award statute. [Copyright &y& Elsevier]

Abstract: The paper focuses on sequential bargaining procedures in which parties are allowed to differ in several respects. We first highlight the strategic effects in the bargaining game and the (often conflicting) incentives that players need to take into account in forming their preferences over agendas. We then show that there is a Pareto superior agenda among the issue-by-issue procedures: this consists in setting the most important issue first, unless this is difficult/urgent (in the sense that there is probability of game breakdown after a rejection in the negotiations over this issue). In this case parties prefer to negotiate over the easy issue first. [Copyright &y& Elsevier]

Abstract: Field experiments conducted in two multi-ethnic republics of Russia show that responders employ varied strategies in an “ultimatum game”. While many responders choose strategies that are monotonically rational and characteristic of most ultimatum game results (rejecting low offers and accepting high ones), almost as many others display a tendency towards “hyper-fairness” (rejecting offers that are too low and too high). Proposers, in turn, seem to take this into account with an unusually high proportion of 50/50 splits. Drawing on data from the experiments and a related survey, this paper focuses on the variation in responders’ strategies, and the factors that account for the differences. [Copyright &y& Elsevier]

Abstract: The recent anti-privatization trend in Latin America, France and South Africa, is a reminder that employees resist privatization, because pre-privatization firms tend to be over-manned and to pay excessive wages. We study the effect of employees’ resistance on the successful implementation of privatization in a stylized model in which the government interacts with employees of an unknown type. The analysis clarifies some of the difficulties associated with the implementation process. Furthermore, although common sense dictates that the government negotiates with the employees before finding an outside buyer, we show that sometimes it is better off contacting an investor first. [Copyright &y& Elsevier]

Abstract: In the first part of this paper, we conduct an empirical analysis of all research joint ventures registered under the National Cooperative Research Act. We document the pervasiveness of multiproject contact, defined as groups of firms engaging in several research joint ventures together. In the second part of the paper, we develop a theoretical model providing a new rationale for multiproject contact. In the model, each project involves decisions that are the subject of negotiations among participants. The inefficiency associated with bargaining under asymmetric information can be mitigated if negotiations over several projects are combined. [Copyright &y& Elsevier]

This paper studies data from the wholesale fruit and vegetables market in Marseille. We have details of counteroffers to the prices that were proposed by the seller even when no transaction took place. We analyse the evolution of prices and the relation between the final price struck and the proposals of the two parties. Periods with no buyer refusals, of offers or bargaining with no transaction will lead to a revision of the seller's first price. More importantly the sharing of the surplus moves in the buyer's favour during the day. These theoretical predictions are confirmed by our data set. [ABSTRACT FROM AUTHOR]

We develop a two-person negotiation model with complete information that makes endogenous both the deadline and the level of surplus destruction after the deadline. We show that the undominated Nash equilibrium outcome is always unique but might be inefficient. Moreover, as the bargaining period becomes short or as the players become very patient, the unique undominated Nash equilibrium outcome is always inefficient. [Copyright &y& Elsevier]

This paper reports the results of a bargaining experiment. We follow the pre-trial bargaining model of Gertner and Miller (1995) under uncertainty and examine the effect of a litigation institution, called a settlement escrow, and uncertainty on the timing and quality of settlement outcomes. Our findings indicate that settlement rates are significantly higher when a settlement escrow is added to the bargaining process where there is asymmetric information. Quality of outcomes, measured as the percentage of the true damage that the outcome represents, is positively and significantly influenced by the addition of a settlement escrow. [Copyright &y& Elsevier]

Several recent theories in behavioral game theory seek to explain the behavior of subjects in experimental bargaining games. These models can be partitioned into two classes: outcome-based and intention-based. Outcome-based models treat the intentions that players attribute to one another as unnecessary for predicting behavior. Intention-based approaches, and in particular the trust and reciprocity (TR) hypothesis, rely on this attribution of intentions in an essential way. We report laboratory data from simple two-person trust games which is inconsistent with outcome-based models, but predicted by the trust and reciprocity hypothesis. [Copyright &y& Elsevier]