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Field
Abstract
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Before
We conduct laboratory experiments to compare decentralized bargaining to automated dispute resolution in scenarios of either one-issue or two-issue bargaining. For one-issue situations, the optimal mechanism neither achieves full efficiency nor is strategy-proof. However, for disputes involving two issues, an efficient and strategy-proof mechanism can be achieved within a confined parameter set. Within subjects, we vary whether these parameters allow for strategy-proofness in two-issue scenarios. Between subjects, we vary the ODR mechanisms, differentiating between direct and sequential formats. Free-form bargaining serves as our reference baseline.
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After
We conduct laboratory experiments to compare decentralized bargaining to automated dispute resolution in scenarios of either one-issue or two-issue bargaining. For one-issue situations, the optimal mechanism neither achieves full efficiency nor is strategy-proof. However, for disputes involving two issues, an efficient and strategy-proof mechanism can be achieved within a confined parameter set. Within subjects, we vary whether these parameters allow for strategy-proofness in two-issue scenarios. Between subjects, we vary the ODR mechanisms and the number of issues. Free-form bargaining serves as our reference baseline.
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Field
Intervention (Public)
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Before
Treatments between subjects vary the way barganing is implemented.
One issue Two issues
Free bargaining (Barg). Barg1 Barg2
ODR direct one shot (DirODR) DirODR1 DirODR2
ODR sequential two steps (SeqODR) SeqODR1 SeqODR2
We also later add ODRAI treatment, that adjust submitted bids based on predicted overbidding in the ODR1
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After
Treatments between subjects vary the way barganing is implemented.
One issue Two issues
Free bargaining (Barg). Barg1 Barg2
ODR direct one shot (DirODR) DirODR1 DirODR2
Within subjects the strong vs weak outside options, and for two dimensions whether multiplier allows for the logrolling strategy-proof mechanism.
We also later add ODRAI treatment, that adjust submitted bids based on predicted overbidding in the ODR1
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Field
Experimental Design (Public)
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Before
There are 30 participants in the experiment in each session, split into two groups of 15 for the whole experiment.
The experiment consists of 20 rounds. Only one round is payoff relevant. At the beginning of each round, all participants of each group are randomly matched in pairs. Participants know they are matched with a new random participant from the group of 15 every round.
In each round, there are 100 items of type A and 100 items of type B to split.
For type A, participants have outside options, i.e., the number of items of type A they will receive in the case of bargaining failure. Subjects know that the outside options vi could be any number between 0 and 100 with equal probability and are drawn independently for each subject.
The outside options for the type B object are equal to 0 for both subjects, and they know it. However, each subject has a different multiplier for the points of type B. Multiplier is drawn independently for each subject from the uniform distribution between [0.7,1.3]. Subjects know their multiplier for the round and the distribution.
Finally, the market could either with or without deal-breaking for type A items. In markets with deal-breaking, subjects receive zero points if they end up with fewer A type items than their outside option. Subjects know that the presence of a deal-breaking property is the same for all subjects in the round. The utility function for each round is presented. To simplify the setup, subjects will play the first ten rounds under no deal-breaking, followed by 10 rounds of deal-breaking, or in the reversed order. We will balance the order. We will remind subjects of the switch in the utility function after round 10.
This corresponds to no information treatment of Bochet et al. 2023.
Under this parametrization, in expectation, 28% of markets have a surplus large enough to reach efficiency even in one-dimensional bargaining (the sum of outside options is less than 75). 22% of the markets have a small surplus and cannot reach an agreement despite a positive surplus from bargaining (the sum of outside options is between 75 and 100). 50% of the markets have no surplus, as the sum of outside values is higher than 100. This implies that, in expectation, we will have 22 hard markets
The deal-breaking property affects the utility function of subjects. Under no deal-breaking, a subject’s payoff for the round is
U_i=A_i+w_i*B_i
where A_i is agreed amount of type A items or v_i if agreement is not reached. B_i is agreed amount of the type B item or 0 is agreement is not reached.
Under deal-breaking a subject’s payoff for the round is
U_i=A_i+w_i*B_i if A_i≥v_i, or 0 if A_i<v_i
where A_i is agreed amount of type A items or v_i if agreement is not reached. B_i is agreed amount of the type B item or 0 if agreement is not reached. Thus, accepting an offer of type A item below outside option leads to zero payoff from type A items.
The points collected in U are transformed in euros with exchange rate of 10 cents per 1 point.
Treatments.
We have 3x2 between-subject design.
One issue Two issues
Free bargaining (Barg). Barg1 Barg2
ODR direct one shot (DirODR) DirODR1 DirODR2
ODR sequential two steps (SeqODR) SeqODR1 SeqODR2
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After
There are 30 participants in the experiment in each session, split into two groups of 15 for the whole experiment.
The experiment consists of 20 rounds. Only one round is payoff relevant. At the beginning of each round, all participants of each group are randomly matched in pairs. Participants know they are matched with a new random participant from the group of 15 every round.
In each round, there are 100 items of type A and 100 items of type B to split.
For type A, participants have outside options, i.e., the number of items of type A they will receive in the case of bargaining failure. Subjects know that the outside options vi could be any number between 0 and 100 with equal probability and are drawn independently for each subject.
The outside options for the type B object are equal to 0 for both subjects, and they know it. However, each subject has a different multiplier for the points of type B. Multiplier is drawn independently for each subject from the uniform distribution between [0.7,1.3]. Subjects know their multiplier for the round and the distribution.
Finally, the market could either with strong or weak outside option for type A items. In markets with strong outside options, subjects receive zero points if they end up with fewer A type items than their outside option. Subjects know that the presence of a strong outside option is the same for all subjects in the round. The utility function for each round is presented. To simplify the setup, subjects will play the first ten rounds under weak outside option, followed by 10 rounds strong outside option, or in the reversed order. We will balance the order. We will remind subjects of the switch in the utility function after round 10.
This corresponds to no information treatment of Bochet et al. 2023.
Under this parametrization, in expectation, 28% of markets have a surplus large enough to reach efficiency even in one-dimensional bargaining (the sum of outside options is less than 75). 22% of the markets have a small surplus and cannot reach an agreement despite a positive surplus from bargaining (the sum of outside options is between 75 and 100). 50% of the markets have no surplus, as the sum of outside values is higher than 100. This implies that, in expectation, we will have 22 hard markets
The strength of outside option affects the utility function of subjects. Under weak outside option, a subject’s payoff for the round is
U_i=A_i+w_i*B_i
where A_i is agreed amount of type A items or v_i if agreement is not reached. B_i is agreed amount of the type B item or 0 is agreement is not reached.
Under strong outside option a subject’s payoff for the round is
U_i=A_i+w_i*B_i if A_i≥v_i, or 0 if A_i<v_i
where A_i is agreed amount of type A items or v_i if agreement is not reached. B_i is agreed amount of the type B item or 0 if agreement is not reached. Thus, accepting an offer of type A item below outside option leads to zero payoff from type A items.
The points collected in U are transformed in euros with exchange rate of 10 cents per 1 point.
Treatments.
We have 3x2 between-subject design.
One issue Two issues
Free bargaining (Barg). Barg1 Barg2
ODR direct one shot (DirODR) DirODR1 DirODR2
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