The attraction and compromise effects in bargaining: Experimental evidence

Galeotti, Fabio, Montero, Maria and Poulsen, Anders (2021) The attraction and compromise effects in bargaining: Experimental evidence. Management Science. ISSN 0025-1909

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Abstract

We experimentally investigate, in an unstructured bargaining environment with commonly known money payoffs, the attraction effect and compromise effect (AE and CE) in bargaining, namely, a tendency for bargainers to agree to an intermediate option (CE) or to an option that dominates another option (AE). We conjecture that the relevance of the AE and CE in bargaining is constrained by how focal the feasible agreements’ payoffs are. We indeed observe that there are significant AEs and CEs, but these effects are mediated by the efficiency and equality properties of the feasible agreements. Due to the allure of equality, the effects are harder to observe when an equal earnings contract is available. Decoys are more effective in shifting agreements from a very unequal contract to a less unequal one rather than the reverse.

Item Type: Article
Additional Information: The online appendix and data are available at https://doi.org/10.1287/mnsc.2021.4025
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: LivePure Connector
Date Deposited: 24 Mar 2021 00:41
Last Modified: 21 Jul 2021 01:45
URI: https://ueaeprints.uea.ac.uk/id/eprint/79550
DOI: 10.1287/mnsc.2021.4025

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