Skip to main content

Research Repository

Advanced Search

How sensitive are bargaining outcomes to changes in disagreement payoffs?

Anbarci, N.; Feltovich, N.

Authors

N. Feltovich



Abstract

We use a human-subjects experiment to investigate how bargaining outcomes are affected by changes in bargainers’ disagreement payoffs. Subjects bargain against changing opponents, with randomly drawn asymmetric disagreement outcomes that vary over plays of the game, and with complete information about disagreement payoffs and the cake size. We find that subjects only respond about half as much as theoretically predicted to changes in their own disagreement payoff and to changes in their opponent’s disagreement payoff. This effect is observed in a standard Nash demand game and a related unstructured bargaining game, in both early and late rounds, and is robust to moderate changes in stake sizes. We show theoretically that standard models of expected utility maximisation are unable to account for this under-responsiveness, even when generalised to allow for risk aversion. We also show that quantal-response equilibrium has, at best, mixed success in characterising our results. However, a simple model of other-regarding preferences can explain our main results.

Citation

Anbarci, N., & Feltovich, N. (2013). How sensitive are bargaining outcomes to changes in disagreement payoffs?. Experimental Economics, 16(4), 560-596. https://doi.org/10.1007/s10683-013-9352-1

Journal Article Type Article
Acceptance Date Jan 21, 2013
Online Publication Date Feb 1, 2013
Publication Date 2013-12
Deposit Date Aug 17, 2018
Journal Experimental Economics
Print ISSN 1386-4157
Electronic ISSN 1573-6938
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 16
Issue 4
Pages 560-596
DOI https://doi.org/10.1007/s10683-013-9352-1
Public URL https://durham-repository.worktribe.com/output/1322729