[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v59y2013icp167-188.html
   My bibliography  Save this article

Focal points in tacit bargaining problems: Experimental evidence

Author

Listed:
  • Isoni, Andrea
  • Poulsen, Anders
  • Sugden, Robert
  • Tsutsui, Kei
Abstract
We use a new experimental design to test Schelling's hypotheses about the nature and effectiveness of focal points in tacit bargaining problems. In our design, as in many real-world bargaining problems, each player's strategies are framed as proposals about what part of a stock of valuable objects she is to take, and there are payoff-irrelevant cues which define relations between players and objects. In line with Schelling's hypotheses, we find that such cues serve as powerful focal points. Their presence increases efficiency even in games where there is no efficient and equal division, and induces systematically unequal payoff distributions.

Suggested Citation

  • Isoni, Andrea & Poulsen, Anders & Sugden, Robert & Tsutsui, Kei, 2013. "Focal points in tacit bargaining problems: Experimental evidence," European Economic Review, Elsevier, vol. 59(C), pages 167-188.
    • Handle: RePEc:eee:eecrev:v:59:y:2013:i:c:p:167-188
    DOI: 10.1016/j.euroecorev.2012.12.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292112001602
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.euroecorev.2012.12.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vincent P. Crawford & Uri Gneezy & Yuval Rottenstreich, 2008. "The Power of Focal Points Is Limited: Even Minute Payoff Asymmetry May Yield Large Coordination Failures," American Economic Review, American Economic Association, vol. 98(4), pages 1443-1458, September.
    2. Guth, Werner & Huck, Steffen & Rapoport, Amnon, 1998. "The limitations of the positional order effect: Can it support silent threats and non-equilibrium behavior?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 313-325, February.
    3. Stahl Dale O. & Wilson Paul W., 1995. "On Players' Models of Other Players: Theory and Experimental Evidence," Games and Economic Behavior, Elsevier, vol. 10(1), pages 218-254, July.
    4. Bacharach, Michael & Bernasconi, Michele, 1997. "The Variable Frame Theory of Focal Points: An Experimental Study," Games and Economic Behavior, Elsevier, vol. 19(1), pages 1-45, April.
    5. Sugden, Robert, 1995. "A Theory of Focal Points," Economic Journal, Royal Economic Society, vol. 105(430), pages 533-550, May.
    6. Nicholas Bardsley & Judith Mehta & Chris Starmer & Robert Sugden, 2010. "Explaining Focal Points: Cognitive Hierarchy Theory "versus" Team Reasoning," Economic Journal, Royal Economic Society, vol. 120(543), pages 40-79, March.
    7. Simon Gächter & Arno Riedl, 2005. "Moral Property Rights in Bargaining with Infeasible Claims," Management Science, INFORMS, vol. 51(2), pages 249-263, February.
    8. Cooper, Russell & Douglas V. DeJong & Robert Forsythe & Thomas W. Ross, 1993. "Forward Induction in the Battle-of-the-Sexes Games," American Economic Review, American Economic Association, vol. 83(5), pages 1303-1316, December.
    9. Holm, Hakan J., 2000. "Gender-Based Focal Points," Games and Economic Behavior, Elsevier, vol. 32(2), pages 292-314, August.
    10. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-1326, December.
    11. Maarten Janssen, 2001. "Rationalizing Focal Points," Theory and Decision, Springer, vol. 50(2), pages 119-148, March.
    12. Roth, Alvin E & Murnighan, J Keith, 1982. "The Role of Information in Bargaining: An Experimental Study," Econometrica, Econometric Society, vol. 50(5), pages 1123-1142, September.
    13. Ben Greiner, 2004. "The Online Recruitment System ORSEE 2.0 - A Guide for the Organization of Experiments in Economics," Working Paper Series in Economics 10, University of Cologne, Department of Economics.
    14. Ben Greiner, 2004. "The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics," Papers on Strategic Interaction 2003-10, Max Planck Institute of Economics, Strategic Interaction Group.
    15. Maarten C.W. Janssen, 2006. "On the Strategic Use of Focal Points in Bargaining Situations," Tinbergen Institute Discussion Papers 06-040/1, Tinbergen Institute.
    16. Mehta, Judith & Starmer, Chris & Sugden, Robert, 1994. "The Nature of Salience: An Experimental Investigation of Pure Coordination Games," American Economic Review, American Economic Association, vol. 84(3), pages 658-673, June.
    17. Janssen, Maarten C.W., 2006. "On the strategic use of focal points in bargaining situations," Journal of Economic Psychology, Elsevier, vol. 27(5), pages 622-634, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bett, Zoë & Poulsen, Anders & Poulsen, Odile, 2016. "The focality of dominated compromises in tacit coordination situations: Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 60(C), pages 29-34.
    2. repec:uea:wcbess:13-02 is not listed on IDEAS
    3. Isoni, Andrea & Poulsen, Anders & Sugden, Robert & Tsutsui, Kei, 2019. "Focal points and payoff information in tacit bargaining," Games and Economic Behavior, Elsevier, vol. 114(C), pages 193-214.
    4. Zoe Bett & Anders Poulsen & Odile Poulsen, 2013. "How Salient is an Equal but Inefficient Outcome in a Coordination Situation? Some Experimental Evidence," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 13-02-R, School of Economics, University of East Anglia, Norwich, UK..
    5. Elten, Jonas van & Penczynski, Stefan P., 2020. "Coordination games with asymmetric payoffs: An experimental study with intra-group communication," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 158-188.
    6. Federica Alberti & Edward J. Cartwright, 2016. "Full agreement and the provision of threshold public goods," Public Choice, Springer, vol. 166(1), pages 205-233, January.
    7. Alessandro Sontuoso & Sudeep Bhatia, 2021. "A notion of prominence for games with natural‐language labels," Quantitative Economics, Econometric Society, vol. 12(1), pages 283-312, January.
    8. Bosch-Domènech, Antoni & Vriend, Nicolaas J., 2013. "On the role of non-equilibrium focal points as coordination devices," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 52-67.
    9. Luhan, Wolfgang J. & Poulsen, Anders U. & Roos, Michael W.M., 2017. "Real-time tacit bargaining, payoff focality, and coordination complexity: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 102(C), pages 687-699.
    10. Schmidt, Robert J., 2019. "Capitalizing on the (false) consensus effect: Two tractable methods to elicit private information," Working Papers 0669, University of Heidelberg, Department of Economics.
    11. Bardsley, Nicholas & Ule, Aljaž, 2017. "Focal points revisited: Team reasoning, the principle of insufficient reason and cognitive hierarchy theory," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 74-86.
    12. Alessandra Smerilli, 2012. "We-thinking and vacillation between frames: filling a gap in Bacharach’s theory," Theory and Decision, Springer, vol. 73(4), pages 539-560, October.
    13. Lisa Bruttel & Tim Friehe, 2013. "Make Humans Randomize," Working Paper Series of the Department of Economics, University of Konstanz 2013-20, Department of Economics, University of Konstanz.
    14. Kets, Willemien & Kager, Wouter & Sandroni, Alvaro, 2022. "The value of a coordination game," Journal of Economic Theory, Elsevier, vol. 201(C).
    15. Waichman, Israel & Requate, Till & Korzhenevych, Artem, 2013. "Equal split in the informal market for group train travel," Economics Letters, Elsevier, vol. 118(2), pages 327-329.
    16. Bosch-Domènech, Antoni & Vriend, Nicolaas J., 2013. "On the role of non-equilibrium focal points as coordination devices," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 52-67.
    17. Sitzia, Stefania & Zheng, Jiwei, 2019. "Group behaviour in tacit coordination games with focal points – an experimental investigation," Games and Economic Behavior, Elsevier, vol. 117(C), pages 461-478.
    18. Alberti, Federica & Sugden, Robert & Tsutsui, Kei, 2012. "Salience as an emergent property," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 379-394.
    19. Pope, Devin G. & Pope, Jaren C. & Sydnor, Justin R., 2015. "Focal points and bargaining in housing markets," Games and Economic Behavior, Elsevier, vol. 93(C), pages 89-107.
    20. Subhasish Dugar & Quazi Shahriar, 2012. "Focal Points and Economic Efficiency: The Role of Relative Label Salience," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 954-975, January.
    21. Bruttel, Lisa & Friehe, Tim, 2015. "A note on making humans randomize," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 40-45.

    More about this item

    Keywords

    Tacit bargaining; Relational cue; Payoff-irrelevant cue; Focal point;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eecrev:v:59:y:2013:i:c:p:167-188. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.