A computer screen showing changes in stock trade price

Beyond dividing the pie: Multi-Issue bargaining in the laboratory

In the recent publication of The Review of Economic Studies (January 2024, Volume 91, Issue 1), Olivier Bochet, Manshu Khanna, and Simon Siegenthaler explore the complexities of multi-issue bargaining through an innovative laboratory experiment. Read here: https://doi.org/10.1093/restud/rdad031. This paper tests bargaining protocols in situations where agents negotiate over multiple issues. in line with the theme of the institutional design research at C-BID

In their innovative laboratory experiment, Bochet, Khanna, and Siegenthaler explore the dynamics of multi-issue bargaining, shedding light on how negotiators approach the complexities of negotiating multiple agendas simultaneously. This research contributes to a better understanding of bargaining behaviors and provides valuable insights with implications for both theory and practice.

● The study reveals that negotiators often successfully trade across the efficient set of issues, demonstrating that even in the absence of detailed information about individual issues, parties can still reach beneficial agreements.

● The research highlights that successful agreements depend heavily on the ability of negotiators to engage in integrated negotiations, allowing them to bundle multiple issues together. This bundling is crucial in maximizing the potential for mutually beneficial outcomes.

Some key findings

● The results indicate that while increased information can enhance agreement rates in scenarios with small surpluses, it can also lead to complications in larger surplus negotiations. Specifically, more information may foster riskier behavior and conflicting fairness preferences among negotiators.

● Successful negotiations in the experiment evolved around a specific convention that developed organically. This convention revolves around alternating offers, where parties meet each other’s demands halfway, facilitating smoother bargaining processes.

This research demonstrates C-BID's commitment to understanding complex human behaviors in negotiation contexts and advancing the study of collaborative decision-making processes to produce empirical research that informs public policy, enhances economic interactions, and shed light on the social intricacies inherent in multi-issue bargaining situations. By exploring novel contexts and methods, we strive to contribute meaningful insights into the mechanics of negotiation dynamics in various settings.