Bargaining

Abstract

Bargaining experiments constitute a fundamental line of development of experimental methodology in economics. The first bargaining experiments, carried out in the 1960s and ’70s, aimed to test classic formal bargaining models. These unstructured bargaining experiments will be reviewed in the first section of this chapter. In the 1980s, bargaining experiments became simpler: they no longer aimed to merely study the limits of certain theoretical models, but also to answer more general questions concerning strategic interaction in bargaining contexts. In this structured bargaining phase, the key experiment is the well-known ultimatum game, which represents the minimal setting of a negotiation. This game, as well as the multiple experimental manipulations of it, will constitute the main topic in the second section of this chapter. Finally, we will briefly cover dynamic bargaining experiments, in which negotiation takes place over time.