An experimental test of Rubinstein's bargaining model

Abstract

This paper offers an experimental test of a version \nof Rubinstein’s bargaining model in which the players’ discount \nfactors are unequal. We find that learning, rationality, and fairness \nare all significant in determining the outcome. In particular, \nwe find that a model of myopic optimization over time predicts \nthe sign of deviations in the opening proposal from the final \nundiscounted agreement in the previous period rather well. To \nexplain the amplitude of the deviations, we then successfully fit \na perturbed version of the model of myopic adjustment to the \ndata that allows for a bias toward refusing inequitable offers.

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