Communication in multilateral bargaining with joint production

Abstract

We experimentally investigate the effect on efficiency of pre-bargaining communication in a multilateral majoritarian bargaining game with joint production under two conditions: observable and unobservable productive investments. In both conditions, communication mainly fosters fair sharing and is rarely used by proposers to pit voters against each other. A virtuous cycle of proportional surplus sharing arises in treatments with observable investments regardless of whether communication is possible leading to high efficiency gains over time. In the absence of investment observability, communication is widely used by subjects to truthfully report their investments, which coupled with calls for equitable sharing, allows for substantial efficiency gains. These results contrast sharply with previous findings on bargaining over an exogenous fund where communication leads to highly unequal outcomes, competitive messages, and virtually no calls for fair sharing.