A GENERAL EXPERIMENT ON BARGAINING IN DEMAND GAMES WITH OUTSIDE OPTIONS

This experiment factorially combined the major independent variables f rom Previous demand-game experiments (discount factors, outside option s, termination probability, and first mover). Game-theoretic predictio ns were largely refuted by the data, and outcomes were often inefficie nt. Players without an outside option demanded more than predicted, an d those with an option appeared to anticipate this behavior. Nonethele ss, there was a positive relationship between differences in equilibri um predictions and differences in behavior. Bargainers appeared to foc us on a minimally acceptable offer in making their demands and in cons idering the likelihood that the other party would accept their offer.