Focal Points and Payoff Information in Tacit Bargaining

Andrea Isoni, Anders Poulsen, Robert Sugden, Kei Tsutsui

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Schelling proposed that payoff-irrelevant cues can affect the outcome of tacit bargaining games by creating focal points. Tests of this hypothesis have found that conflicts of interest between players inhibit focal-point reasoning. We investigate experimentally whether this effect is reduced if players have imperfect information about each other’s payoffs. When players know only their own payoffs, they fail to ignore this information even though it cannot assist coordination; the effects of payoff-irrelevant cues on coordination success are small. When no exact information about payoffs is provided, payoff-irrelevant cues are more helpful, but not as much as when conflict is absent.
Original languageEnglish
Pages (from-to)193-214
Number of pages22
JournalGames and Economic Behavior
Volume114
Early online date31 Jan 2019
DOIs
Publication statusPublished - 1 Mar 2019

Keywords

  • Conflict of interest
  • Coordination
  • Focal points
  • Payoff information
  • Payoff-irrelevant cue
  • Tacit bargaining

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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