Walking the Talk in Multiparty Bargaining: An Experimental Investigation

Kathleen McGinn
Harvard Business School – Negotiation, Organizations & Markets Unit

Katherine L. Milkman
University of Pennsylvania – The Wharton School

Markus Noeth
University of Hamburg

November 12, 2009

Harvard Business School NOM Unit Working Paper No. 10-039

Abstract:

We study the framing effects of communication in multiparty bargaining. Communication has been shown to be more truthful and revealing than predicted in equilibrium. Because talk is preference-revealing, it may effectively frame bargaining around a logic of fairness or competition, moving parties on a path toward or away from equal-division agreements. These endogenous framing effects may outweigh any overall social utility effects due to the mere presence of communication. In two experiments, we find that non-binding talk of fairness within a three-party, complete-information game leads toward off-equilibrium, equal division payoffs, while non-binding talk focusing on competitive reasoning moves parties away from equal divisions. Our two studies allow us to demonstrate that spontaneous within-game dialogue and manipulated pre-game talk lead to the same results.

Walking the Talk in Multiparty Bargaining- An Experimental Investigation

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