Bargaining through agents: An experimental study of delegation and commitment

While face-to-face bargaining has proven itself to be extremely efficient i n the laboratory, it appears to break down often in the real world. This di screpancy, we assert, is explained by the fact that in the real world face- to-face bargaining is usually conducted not between principals but between the agents of principals. We find a substantial increase in inefficiency wh en bargaining is conducted through agents rather than through principals an d offer an explanation for this rise in inefficiency. As such, this paper h elps to shed light on the growing literature on delegation, commitment, and preference distortion games. Journal of Economic Literature Classification Numbers: C78, C92. (C) 2000 Academic Press.