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Round-Number Effects in Bargaining: Bias vs. Focal Point

Last registered on December 02, 2020

Pre-Trial

Trial Information

General Information

Title
Round-Number Effects in Bargaining: Bias vs. Focal Point
RCT ID
AEARCTR-0006823
Initial registration date
December 02, 2020

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
December 02, 2020, 11:23 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Region

Primary Investigator

Affiliation
University of Regensburg

Other Primary Investigator(s)

PI Affiliation
University of Regensburg

Additional Trial Information

Status
On going
Start date
2020-07-22
End date
2021-01-15
Secondary IDs
Abstract
It is well-established that round numbers play an important role in bargaining situations. In a first step, using data from Backus, Blake and Tadelis (2019) we show that a large fraction of successful negotiations end with a round price, and that round final prices are associated with quicker agreement. These effects might be driven by a simple preference for round numbers or by round numbers serving as focal points. In a second step, we design a theory-guided experiment to disentangle these explanations. To this end, we plan to run two treatments on Amazon MTurk with roughly 1000 participants. In treatment One, a single decision-maker might be affected by round-number bias. Treatment Two extends the setting in a one-change-at-a-time fashion to two-player bargaining where additionally round numbers as focal points might facilitate coordination. Comparing these two treatments allows to differentiate between the two explanations.

Registration Citation

Citation
Lauf, Alexander and Lars Schlereth. 2020. "Round-Number Effects in Bargaining: Bias vs. Focal Point." AEA RCT Registry. December 02. https://doi.org/10.1257/rct.6823-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2020-12-04
Intervention End Date
2020-12-25

Primary Outcomes

Primary Outcomes (end points)
We measure the number of accepted offers per treatments and by the offer type.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We deploy a multi-period bargaining game with a shrinking-cake design. There are two treatment groups. Each participant makes a total of 10 decisions to accept or reject a random offer.
Experimental Design Details
Randomization Method
The recruited participants are randomly assigned a treatment by their time of arrival. We randomly draw offer sequences for groups of 4 participants. One group consists of two participants from each treatment.
Randomization Unit
Each participant will randomly be assigned to one of the 2 treatments.
A group of 4 randomly partnered participants consisting of two participants from each treatment see the same offer sequence.

Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
250 (groups with same sequence) and 500 (per treatment)
Sample size: planned number of observations
We plan to recruit 1000 participants.
Sample size (or number of clusters) by treatment arms
1000 participants in 250 groups of 4.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials