Presentation of the paper

The Effects of Payoff-Irrelevant Cues in Dynamic Bargaining Problems

Speaker

Andrea Isoni

University of Cagliari

Abstract

Andrea Isoni (University of Cagliari)

We investigate the effects of payoff-irrelevant cues in bargaining games with communication.  In an experimental design in which two players bargain over the division of a surplus by claiming valuable objects whose spatial location offers easily recognisable cues, we pit Schelling’s hypothesis that such cues can make communication redundant against the intuition that coordination of expectations occurs through cheap talk.  We find that communication is very powerful, leading to high levels of efficiency.  Regardless of whether inefficient divisions are salient or not, they are extremely rare.  Yet, in line with Schelling’s hypothesis, spatial cues have systematic distributional effects. 

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