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The Attraction and Compromise Effects in Bargaining: Experimental Evidence

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  • Fabio Galeotti

    (Université de Lyon, CNRS, GATE UMR 5824, Ecully F-69130, France)

  • Maria Montero

    (School of Economics and Centre for Decision Research and Experimental Economics (CeDEx), University of Nottingham, Nottingham NG7 2RD, United Kingdom)

  • Anders Poulsen

    (School of Economics and Centre for Behavioural and Experimental Social Science (CBESS), University of East Anglia, Norwich NR4 7TJ, United Kingdom)

Abstract
We experimentally investigate, in an unstructured bargaining environment with commonly known money payoffs, the attraction effect and compromise effect (AE and CE) in bargaining, namely, a tendency for bargainers to agree to an intermediate option (CE) or to an option that dominates another option (AE). We conjecture that the relevance of the AE and CE in bargaining is constrained by how focal the feasible agreements’ payoffs are. We indeed observe that there are significant AEs and CEs, but these effects are mediated by the efficiency and equality properties of the feasible agreements. Due to the allure of equality, the effects are harder to observe when an equal earnings contract is available. Decoys are more effective in shifting agreements from a very unequal contract to a less unequal one rather than the reverse.

Suggested Citation

  • Fabio Galeotti & Maria Montero & Anders Poulsen, 2022. "The Attraction and Compromise Effects in Bargaining: Experimental Evidence," Management Science, INFORMS, vol. 68(4), pages 2987-3007, April.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:4:p:2987-3007
    DOI: 10.1287/mnsc.2021.4025
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    More about this item

    Keywords

    bargaining; attraction effect; compromise effect; focality; equality; efficiency;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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