Abstract
We utilise results from a human-subjects experiment to examine the connection between strategic uncertainty and outcomes in games. Our basic game is a Nash demand game where one player has an outside option available. A chat treatment allows bargainers to send cheap-talk messages prior to playing the basic game, and in a contracts treatment, they can additionally propose and accept binding contracts. We propose that strategic uncertainty comprises at least two facets: coordination-type , which is lower in the chat game than in the basic game, and rationality-type , which is lower in the contracts game than in the chat game. We find that both types of strategic uncertainty impact bargaining outcomes: moving from the basic game to the chat game, and thence to contracts, improves several aspects of outcomes, such as higher efficiency, less opting out and less under-demanding. Other results include a treatment effect on the types of agreements that are reached.
Original language | English |
---|---|
Pages (from-to) | 554 - 574 |
Number of pages | 21 |
Journal | European Economic Review |
Volume | 55 |
Issue number | 4 |
DOIs | |
Publication status | Published - 2011 |
Externally published | Yes |