Introduction

The purpose of this chapter is to consider some recent experimental evidence that existing models of bargaining, both axiomatic and strategic, are incomplete in ways that make them unlikely candidates from which to build powerful descriptive models of bargaining. After reviewing some of this evidence, a direction will be proposed that seems to offer some promising possibilities, and this will be briefly explored with the aid of an extremely simple preliminary model.

The plan of the chapter is as follows. Section 12.2 reviews some experiments in which certain kinds of information that are assumed by existing game-theoretic models not to influence the outcome of bargaining were nevertheless observed to have a dramatic effect. The data from these experiments make it plausible to suggest that bargainers sought to identify initial bargaining positions that had some special reason for being credible, and that these credible bargaining positions then served as focal points that influenced the subsequent conduct of negotiations, and their outcome. Section 12.3 explores this idea by investigating a simple model of coordination between two well-defined focal points. This model exhibits some of the same qualitative features observed in the bargaining data, concerning the frequency of disagreements as a function of the focal points. The section concludes with a brief discussion.

Review of four experiments

To test theories that depend on the expected utilities of the players, it is desirable to design experiments that allow the participants' utility functions to be determined.