Experimental Design
This study examines the bargaining decisions of human participants to avoid conflict in a game with private information. Each of two players will privately observe a "secret number," which are iid random draws from a uniform distribution between 0 and 100. The players then bargain over how to divide 120 experimental currency units or "tokens." If no agreement is reached, conflict occurs. In conflict, the player with the higher secret number gets 100 tokens, while the other player gets 0 tokens.
Between subjects, we compare two bargaining protocols. In the SPLITS condition, the two player simultaneous indicate whether they would agree to each of 13 possible divisions of 120 tokens, from 0 for self and 120 for other to the opposite extreme by increments of 10 tokens. If any split is mutually agreed, payoffs are determined according to the agreement. If multiple splits are mutually agreed, one is randomly selected by the computer. If no split is mutually agreed, conflict occurs.
In the ULTIMATUM condition, one player is randomly assigned at the proposer, and the other as responder. The proposer chooses an offer from the same menu used in the SPLITS condition. The responder then observes the offer and chooses whether to accept or reject. If the proposal is accepted, then payoffs are determined according to the agreement. Otherwise, conflict occurs.
Within subjects, we also compare conditions with and without free-form chat before bargaining. In SPLITS-CHAT and ULTIMATUM-CHAT conditions, players can chat with each other freely for up to 3 minutes after observing their secret numbers, but before bargaining.
Also within subject, we examine conditions played in teams. In the SPLITS-TEAMS and ULTIMATUM-TEAMS conditions, players are randomly matched into fixed teams of 2. Teammates can chat with each other for up to 1 minute before entering a phase of chat with the other team of up to 3 minutes. During this phase, teammates can also chat privately in a separate chat window. In ULTIMATUM-TEAMS, the team in the responder role has an additional opportunity to chat for up to 1 minute after seeing the proposer's offer.
Each session begins with 6 rounds of the SPLITS or ULTIMATUM conditions in Part 1, matched randomly into pairs of 2 within a matching group of 8 in each round. Next, there are 6 additional rounds of the corresponding CHAT condition in Part 2, again matched randomly into pairs of 2 within the same matching groups of 8 in each round. In Part 3, there are 6 additional rounds of the corresponding TEAMS condition, with teams fixed but randomly matched into groups of 2 teams in each round. In each of the three blocks of 6 rounds, one round is randomly selected by the computer for payment.
Finally, all participants will complete several secondary tasks, including social value orientation, cognitive reflection test, multiple price list risk preference elicitation, and a demographic questionnaire.
Sessions are planned for 16 participants (2 matching groups of 8), but may be run with 12 participants (2 matching groups of 6) in case of absences.
Hypotheses:
Due to adverse selection, we hypothesize that no split will be offered or accepted that does not give one of the two players at least 100 tokens.
Our null hypothesis regarding chat is that the incentive to report and inflated secret number will lead to no credible communication of private information.
We have no a priori hypothesis about the difference between individual and team behavior. Instead, we use team chats primarily to gain insight into the thought and decision process through chat content analysis.