The Attraction and Compromise Effects in Bargaining: Experimental Evidence

34 Pages Posted: 18 Feb 2021

See all articles by Fabio Galeotti

Fabio Galeotti

GATE, CNRS

Maria Montero

University of Nottingham - School of Economics

Anders Poulsen

University of East Anglia

Date Written: January 7, 2021

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.

Keywords: bargaining, attraction effect, compromise effect, focality, equality, efficiency.

JEL Classification: C70, C72, C92.

Suggested Citation

Galeotti, Fabio and Montero, Maria and Poulsen, Anders, The Attraction and Compromise Effects in Bargaining: Experimental Evidence (January 7, 2021). Available at SSRN: https://ssrn.com/abstract=3762075 or http://dx.doi.org/10.2139/ssrn.3762075

Fabio Galeotti

GATE, CNRS ( email )

93, chemin des Mouilles
Ecully, 69130
France

HOME PAGE: http://https://www.gate.cnrs.fr/spip.php?article795

Maria Montero (Contact Author)

University of Nottingham - School of Economics ( email )

Centre for Decision Research & Experimental Econ.
University Park
Nottingham NG7 2RD
United Kingdom

Anders Poulsen

University of East Anglia ( email )

Norwich NR47TJ, Norfolk
United Kingdom
+44 0 1603 591066 (Phone)

HOME PAGE: http://www.uea.ac.uk/eco/ecopeople/PoulsenA.html

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