We report results from a laboratory experiment on strategic bargaining with indivisibilities studying the role of asymmetries, both in preferences and institutions. Institutions are modeled as probabilities of proposing. Subjects do not fully grasp the equilibrium effects asymmetries have on bargaining power, especially in case of probabilities. In contrast to previous experimental work, proposer power is larger than predicted since subjects frequently propose and accept their second-preferred option. Quantal response equilibrium and risk aversion explain behavior whenever probabilities are symmetric, but less so when asymmetric. The ‘recognition is power’ heuristic that equates bargaining power with probabilities explains these findings.
# 15-071/II (2015-06-01; 2017-01-13)
- Aaron Kamm, University of Amsterdam, the Netherlands; Harold Houba, VU University Amsterdam, the Netherlands
- Committees; Indivisibilities; Institutions, Preferences; Quantal Response Equilibrium; Condorcet Paradox
- JEL codes:
- D71, D72, C92, C7