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Evidence of general economic principles of bargaining and trade from 2,000 classroom experiments

Author

Listed:
  • Lin, Po-Hsuan
  • Brown, Alexander L.
  • Imai, Taisuke
  • Wang, Joseph Tao-yi
  • Wang, Stephanie W.
  • Camerer, Colin F.

Abstract

Camerer et al. use standardized experiments across thousands of students to demonstrate empirical regularities in two-person bargaining and trading in markets. Bargaining outcomes lean toward equal sharing, and markets rapidly create prices that match supply and demand. Standardized classroom experiments provide evidence about how well scientific results reproduce when nearly identical methods are used. We use a sample of around 20,000 observations to test reproducibility of behaviour in trading and ultimatum bargaining. Double-auction results are highly reproducible and are close to equilibrium predictions about prices and quantities from economic theory. Our sample also shows robust correlations between individual surplus and trading order, and autocorrelation of successive price changes, which test different theories of price dynamics. In ultimatum bargaining, the large dataset provides sufficient power to identify that equal-split offers are accepted more often and more quickly than slightly unequal offers. Our results imply a general consistency of results across a variety of different countries and cultures in two of the most commonly used designs in experimental economics.

Suggested Citation

  • Lin, Po-Hsuan & Brown, Alexander L. & Imai, Taisuke & Wang, Joseph Tao-yi & Wang, Stephanie W. & Camerer, Colin F., 2020. "Evidence of general economic principles of bargaining and trade from 2,000 classroom experiments," Munich Reprints in Economics 84761, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:84761
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    Cited by:

    1. Itzhak Rasooly, 2022. "Competitive equilibrium and the double auction," Papers 2209.07532, arXiv.org.
    2. Itzhak Rasooly, 2022. "Competitive equilibrium and the double auction," Economics Series Working Papers 974, University of Oxford, Department of Economics.
    3. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. Po-Hsuan Lin, 2022. "Cognitive Hierarchies in Multi-Stage Games of Incomplete Information: Theory and Experiment," Papers 2208.11190, arXiv.org, revised Nov 2023.
    5. Barbara Ikica & Simon Jantschgi & Heinrich H. Nax & Diego G. Nuñez Duran & Bary S. R. Pradelski, 2023. "Competitive Market Behavior: Convergence And Asymmetry In The Experimental Double Auction," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(3), pages 1087-1126, August.
    6. Sabiou M. Inoua & Vernon L. Smith, 2022. "Perishable goods versus re-tradable assets: A theoretical reappraisal of a fundamental dichotomy," Chapters, in: Sascha Füllbrunn & Ernan Haruvy (ed.), Handbook of Experimental Finance, chapter 15, pages 162-171, Edward Elgar Publishing.
    7. Tirza J. Angerhofer & Roger D. Blair, 2021. "Successive Monopoly, Bilateral Monopoly and Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 343-361, September.

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