SPLITTING THE DIFFERENCE IN INCOMPLETE‐INFORMATION BARGAINING: THEORY AND WIDESPREAD EVIDENCE FROM THE FIELD

B-Tier
Journal: International Economic Review
Year: 2024
Volume: 65
Issue: 4
Pages: 1911-1939

Authors (6)

Daniel Keniston (not in RePEc) Bradley J. Larsen (National Bureau of Economic Re...) Shengwu Li (Harvard University) J.J. Prescott (not in RePEc) Bernardo S. Silveira (not in RePEc) Chuan Yu (not in RePEc)

Score contribution per author:

0.335 = (α=2.01 / 6 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This article documents a robust pattern from diverse sequential bargaining settings: agents favor offers that split the difference between the previous two offers. Our empirical settings include used cars, insurance claims, home sale, trade tariffs, a TV game show, eBay, and auto‐rickshaws. These even‐split offers are more likely to be accepted, less likely to spur exit by the opponent, and more likely to be followed by subsequent split‐the‐difference offers if bargaining continues. We propose several theoretical frameworks to explain this behavior, including an inference argument under which split‐the‐difference offers can be viewed as an equal split of the potential surplus.

Technical Details

RePEc Handle
repec:wly:iecrev:v:65:y:2024:i:4:p:1911-1939
Journal Field
General
Author Count
6
Added to Database
2026-01-25