Bargaining efficiency and screening: an experimental investigation

This paper investigates whether information about generosity or fairness can be useful in reducing dispute costs and enhancing bargaining efficiency. Subjects were first screened using a dictator game, with the allocations chosen used to separate participants into two types. Mutually anonymous pairs of subjects then bargained, with a dispute cost structure imposed. Sorting with identification reduces dispute costs; there are also significant differences in bargaining efficiency across pairing-types. information about types is crucial for these differences and also strongly affects the relative bargaining success of the two types and the hypothetical optimal bargaining strategy. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: J52; C91; C78.