Collaborative Bargaining in the Shadow of a Backstop Policy: An Experiment

by Christopher Bruce and Jeremy Clark

Collaborative bargaining is widely used to resolve disputes over policies with multiple attributes. In standard bargaining theory, utility maximizing parties would be predicted to select an outcome that lay within the bargaining lens defined by the government-selected backstop - an outcome that may be sub-optimal. Recent experimental results suggest, however, that bargainers may be egalitarian or concerned to maintain historical entitlements, opening the possibility that they might select outcomes outside the bargaining lens. In a two-party, two-attribute experiment, in which subjects jointly select from up to 200 options, we find evidence that history matters and that parties are egalitarian.

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