Efficiency of Alternative Bargaining Procedures

Abstract

This article reviews experimental work on two party bargaining where a bargainer has information unavailable to the other party. The situation is one where the bargaining is on a single issue only and is distributive, (i.e., the negotiations are on the sharing or distribution of the common gains from trade). Two experimental situations are reviewed and several observations are drawn, including the following: (1) in a single-stage game, a simultaneous offer does more poorly than either a buyer first or a seller first offer; (2) neither buyer first nor seller first offer seems superior; (3) no procedure with symmetric information offers an advantage to the buyer or the seller; (4) seller first offer is most efficient in the case where the seller has more information; and (5) more information leads to an advantage to the bargainer with the additional information. The implications of these and other observations for theoretical and additional experimental work in this area are discussed.