The Coase theorem posits: If [1] property rights are perfect, [2] contracts are enforceable, [3] preferences are common knowledge, and [4] transaction costs are zero, then the initial alloca-tion of property rights only matters for distribution, not for efficiency. In this paper we claim that...

We examine experimentally the bargaining process and the final allocation of payoffs in games that differ in terms of whether or not the core exists and in the initial allocation of property rights among the players. The paper highlights the interaction between property rights, transaction costs...