Standing United or Falling Divided? High Stakes Bargaining in a TV Game Show

Richard H. ThalerRichard H. Thaler
University of Chicago – Booth School of Business; National Bureau of Economic Research (NBER)

Dennie Van Dolder
Nottingham School of Economics – University of Nottingham

Martijn J. Van den Assem
VU University Amsterdam – Faculty of Economics and Business Administration

Colin Camerer
California Institute of Technology – Division of the Humanities and Social Sciences

 

Abstract: 

We examine high stakes three-person bargaining in a game show where contestants bargain over a large money amount that is split into three unequal shares. We find that individual behavior and outcomes are strongly influenced by equity concerns: those who contributed more to the jackpot claim larger shares, are less likely to make concessions, and take home larger amounts. Contestants who announce that they will not back down do well relative to others, but they do not secure larger absolute amounts and they harm others. There is no evidence of a first-mover advantage and little evidence that demographic characteristics matter.

Bargaining is ubiquitous in our professional and private lives. Not surprisingly, bargaining has
received considerable research attention. Because real -world settings generally entail a lack of control, most empirical insight s derive from laboratory experiments. The external validity of laboratory findings is, however, still an open question (Levitt and List, 2007 ; Camerer, 2011; Baltussen, van den Assem and van Dolder, 2014). Two of the grounds for concern are the frequent us e of student subjects and the small or hypothetical stakes. In the present study, we use data from the British TV show Divided . This game show combines high stakes and a diverse subject pool within a controlled setting.

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