Specific programme: The Research Council of Norway - Independent basic research projects - Humanities and Social Sciences (FRIHUMSAM)
UPV/EHU Partner Status:  Partner
UPV/EHU PI: Nagore Irriberri Etxebeste
Project start: 01/01/2016
Project end:   31/12/2020
 

Brief description:  The workhorse model of bargaining in economics and political science assume rational agents and complete and perfect information. This model is unable to account for delay or breakdown in bargaining. An emerging theoretical literature explores behavioral causes of bargaining failure, such as biased beliefs, commitments, and lack of common knowledge rationality. We propose to add to this literature, by formulating models and by performing systematic evaluation of competing hypotheses in controlled experiments. The first part of the project addresses bilateral bargaining.

The second part of the project varies according to the broader institutions in which bargaining takes place. Rational bargainers in complete information environments will in general not produce delay or breakdown. However, actual bargaining is conducted in a variety of broader institutional settings - such as markets with matching frictions and various forms of third party intervention. This may give rise to informational challenges that affects efficiency in bargaining. We focus on two aspects of the institutional environment: Institutionalized third party intervention and bargaining embedded in frictional markets.