This paper presents an analysis of general time preferences in the canonical Rubinstein (1982) model of bargaining, allowing for arbitrarily history-dependent strategies. I derive a simple sufficient structure for optimal punishments and thereby fully characterize (i) the set of equilibrium...

This paper analyzes fairness and bargaining in a dynamic bilateral matching market. Traders from both sides of the market are pairwise matched to share the gains from trade. The bargaining outcome depends on the traders’ fairness attitudes. In equilibrium fairness matters because of market...

This paper analyzes fairness and bargaining in a dynamic bilateral matching market. Traders from both sides of the market are pairwise matched to share the gains from trade. The bargaining outcome depends on the traders’ fairness attitudes. In equilibrium fairness matters because of market...

We provide causal evidence that patience is a significant source of bargaining power. Generalizing the Rubinstein (1982) bargaining model to arbitrarily non-stationary discounting, we first show that dynamic consistency across bargaining rounds is sufficient for a unique equilibrium, which we...

I revisit the Rubinstein (1982) model for the classic problem of price hag- gling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no transaction took place (e.g., the equilibrium price exceeds a buyer’s valuation). This arises...

This paper investigates the impact of peer observation on the consumption decisions of rural households in Thailand using a lab-in-the-field experiment. We find that those groups that observe each other show lower within group standard deviation in their decisions. Thus, we find evidence for...

When do we cooperate and why? This question concerns one of the most persistent divides between "theory and practice", between predictions from game theory and results from experimental studies. For about 15 years, theoretical analyses predict completely-mixed "behavior" strategies, i.e....

Matching markets can be unstable when individuals prefer to be matched to a partner who also wants to be matched with them. Through a pre-registered and theory-guided laboratory experiment, we provide evidence that such reciprocal preferences exist, significantly decrease stability in matching...

Informal exchange of information among competitors has been well-documented in a variety of industries, and one's expectation of reciprocity shown to be a key determinant. We use an indeterminate horizon centipede game to establish a feedback loop in the laboratory and show that an individual's...

To address the impact of regulation on ethical concerns of consumers, we study the example of minimum wages. In our experimental market, consumers have monopsony power, firms set prices and wages, and workers are passive recipients of a wage payment. We find that the majority of consumers...