Walking The Talk In Multiparty Bargaining: An Experimental Investigation

Download Now Date Added: Nov 2009
Format: PDF

The authors study the framing effects of communication in multiparty bargaining. Communication has been shown to be more truthful and revealing than predicted in equilibrium. Because talk is preference revealing, it may effectively frame bargaining around logic of fairness or competition, moving parties on a path toward or away from equal-division agreements. These endogenous framing effects may outweigh any overall social utility effects due to the mere presence of communication. In two experiments, they find that non-binding talk of fairness within a three-party, complete-information game leads toward off-equilibrium, equal division pay offs, while non-binding talk focusing on competitive reasoning moves parties away from equal divisions.