The timing of communication and retaliation in bargaining: An experimental study

Abstract

Communication is central to multilateral negotiations in settings such as legislatures, committees, juries, and corporate boards. We conduct an experiment to investigate how the timingo f communication affects bargaining outcomes and dynamics in a multilateral, majoritarian bargaining game. We find t hat allowing for free-form written communication at the proposal making stage results in behavior closer to equilibrium predictions. However, when communication channels are also open during the voting stage, the proportion of equilibrium play is between the proposal stage and no communication treatments. Communication in general affects bargaining dynamics in that, following a disagreement, voters strongly retaliate against failed proposers by offering them a lower share in subsequent rounds. Our results underscore the importance of a detailed analysis of processes and dynamics to understand bargaining outcomes, because even if communication leads to outcomes closer to equilibrium, the strategies employed by subjects need not resemble equilibrium.