On the Strategic Use of Focal Points in Bargaining Situations

@article{Janssen2006OnTS,
  title={On the Strategic Use of Focal Points in Bargaining Situations},
  author={Maarten C. W. Janssen},
  journal={Negotiation Processes \& Communications},
  year={2006}
}
  • M. Janssen
  • Published 1 April 2006
  • Negotiation Processes & Communications
This paper argues that the notion of focal points is important in understanding bargaining processes. Recent literature confines a discussion of the usefulness of the notion to coordination problems and when bargaining experiments result in outcomes that are inconsistent with a straightforward interpretation of economic theory, some notion of 'fairness' is invoked. This paper uses symmetry requirements to formalize the notion of focal points. By doing so, it explains the focality of equal split… 
Focal points in tacit bargaining problems: Experimental evidence
We use a new experimental design to test Schelling's hypotheses about the nature and effectiveness of focal points in tacit bargaining problems. In our design, as in many real-world bargaining
HISTORY DEPENDENCE IN REPEATED BARGAINING
In models of dynamic multilateral bargaining, the literature tends to focus on stationary subgame perfect or stationary Markov perfect equilibria, which restrict attention to forward-looking,
Resistance to Truthful Revelation in Bargaining: Persistent Bid Shading and the Play of Dominated Strategies
We report results from a simultaneous bilateral bargaining experiment with attention to the effects of a settlement bonus on strategic decision-making behavior. In instances with a sufficiently large
Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority
We extend a simple repeated, multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members.
How responsive are people to changes in their bargaining position? Earned bargaining power and the 50–50 norm
A recurring puzzle in bargaining experiments is that individuals under–respond to changes in their bargaining position, compared to the predictions of standard bargaining theories. Nearly all of
Focal points and bargaining in housing markets
TLDR
Sharp spikes in the distribution of final negotiated house prices at round numbers, especially those divisible by $50,000, are documented in the U.S. housing market.
Reconciling Normative and Behavioural Economics
The aim of this thesis is to address from a methodological, philosophical and theoretical perspective the problem of how to reconcile normative and behavioural economics — the “reconciliation
Point beauty contest: measuring the distribution of focal points on the individual level
TLDR
Using Monte Carlo simulations, the proposed mechanism identifies focal points on the population level more efficiently than conventional coordination and point to the possibility of using the mechanism as a simple method to directly measure strategic uncertainty.
15-11 Real Time Tacit Bargaining , Payoff Focality , and Coordination Complexity : Experimental Evidence by
We report experimental data from a bargaining situation where two decision makers tacitly make their decisions, and earn and cumulate their payoffs in real time. Examples include fishermen choosing
Identifying the Ranking of Focal Points in Coordination Games on the Individual Level
TLDR
Using Monte Carlo simulations, the proposed mechanism identifies focal points on the group level significantly more efficiently than ordinary coordination and is pointed to as a simple and direct tool to measure the degree of strategic uncertainty on the individual level.
...
1
2
3
4
...

References

SHOWING 1-10 OF 32 REFERENCES
Focal points and bargaining
TLDR
The equilibrium actually achieved in a session turns out to be a very good predictor of what the median subject says is “fair” in the game after play is over, not supportive of the view that strategic considerations in such situations can be neglected in favor of a study of fairness norms.
Rationalizing Focal Points
Focal points seem to be important in helping players coordinate their strategies in coordination problems. Game theory lacks, however, a formal theory of focal points. This paper proposes a theory of
On the Nature of Fair Behavior
This Paper shows that identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. This result casts doubt
An experimental analysis of ultimatum bargaining
There are many experimental studies of bargaining behavior, but suprisingly enough nearly no attempt has been made to investigate the so-called ultimatum bargaining behavior experimentally. The
Ultimatum Games and Wages: Evidence of an “Implicit Bargain”?
In this paper, I argue that both ultimatum game outcomes and wages may be influenced by what the result of a bargain would have been: The players in the ultimatum game, just as the parties to the
Preferences, Property Rights, and Anonymity in Bargaining Games
Research on ultimatum and dictator games has found that because of "fairness" first movers in such games offer more than noncooperative game theory predicts. We find that if the right to be the first
A Theory of Fairness, Competition and Cooperation
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding
The Strategy of Conflict.
Rationality, coordination, and convention
Philosophers using game-theoretical models of human interactions have, I argue, often overestimated what sheer rationality can achieve. (References are made to David Gauthier, David Lewis, and
On the origin of convention: Evidence from symmetric bargaining games
We use a dynamical systems approach to model the origin of bargaining conventions and report the results of a symmetric bargaining game experiment. Our experiment also provides evidence on the
...
1
2
3
4
...