Bargaining efficiency and screening: an experimental investigation

This paper investigates whether information about generosity or fairness can be useful in reducing dispute costs and enhancing bargaining efficiency. Subjects were first screened using a dictator game, with the allocations chosen used to separate participants into two types. Mutually anonymous pairs of subjects then bargained, with a dispute cost structure imposed. Sorting with identification reduces dispute costs; there are also significant differences in bargaining efficiency across pairing-types. Information about types is crucial for these differences and also strongly affects the relative bargaining success of the two types and the hypothetical optimal bargaining strategy. © 2000 Elsevier Science B.V. All rights reserved. JEL classification: J52; C91; C78