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Communication in Multilateral Bargaining

Agranov, Marina and Tergiman, Chloe (2013) Communication in Multilateral Bargaining. Social Science Working Paper, 1378. California Institute of Technology , Pasadena, CA. (Unpublished)

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One of the most robust phenomena in the experimental literature on multilateral bargaining is the failure of proposers to extract equilibrium rents. However, all previous experiments have overlooked the fact that outside the lab committee members are allowed to - and do - engage in sometimes intense communication processes prior to voting on a proposal. We conduct an experimental test of the Baron-Ferejohn model in which we allow committee members to engage in unrestricted cheap-talk communication before a proposal is submitted. We find that proposers extract a significantly higher share of resources when communication is allowed. Communication increases proposer power through two channels. First, it mitigates the uncertainty surrounding the amount a coalition member is willing to accept. Second, it allows potential coalition members to compete for a place in the coalition by lowering this stated price.

Item Type:Report or Paper (Working Paper)
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Additional Information:The authors would like to acknowledge generous support from SSHRC IDG grant #F12-00384 as well as the Gordon and Betty Moore Foundation Grant GBMF#1158: Experimentation with Large, Diverse and Interconnected Socio-Economic System. We would also like to thank Ernesto Dal Bo, Pedro Dal Bo, Timothy Feddersen, Guillaume Frechette, Alessan- dro Lizerri, John Ledyard, Rebecca Morton, Muriel Niederle, Salvatore Nunnari, Erkut Ozbay, Thomas Palfrey, Al Roth, Emanuel Vespa, Alastair Wilson, Leeat Yariv, the seminar partici- pants at Caltech, UBC, Stanford and UCSD, the conference participants at ESA (Tucson and New York), SITE, and Public Choice for helpful comments and discussions.
Group:Social Science Working Papers
Funding AgencyGrant Number
Social Sciences and Humanities Research Council (SSHRC)F12-00384
Gordon and Betty Moore Foundation1158
Subject Keywords:bargaining, communication
Series Name:Social Science Working Paper
Issue or Number:1378
Classification Code:JEL: C92, D02, D72
Record Number:CaltechAUTHORS:20170726-152606828
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79451
Deposited By: Hanna Storlie
Deposited On:07 Aug 2017 22:00
Last Modified:03 Oct 2019 18:20

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