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

Abstract

We conduct an experiment to investigate how the timing of communication affects bargaining outcomes and dynamics in a majoritarian, sequential bargaining game. Our data show that allowing for free-form written communication at the proposal-making stage leads to higher proposer power and minimum winning coalitions compared to when communication is possible at the voting stage only. Absent communication, outcomes fall in between both communication timings. Voting patterns reveal that the timing of communication affects how subjects evaluate proposals, as they are more likely to vote in favor under proposal-stage communication than under voting-stage communication all else equal. In general, communication affects bargaining dynamics in that voters retaliate more strongly against failed proposers, compared to the no communication baseline. We provide a detailed description of communication content, the medium utilized to communicate, and how the volume and timing of messages affects outcomes. Our results underscore the importance of an in-depth analysis of processes and dynamics to understand bargaining behavior, because even when communication may lead to outcomes that resemble equilibrium, the strategies employed by subjects need not.