2002

Abstract
Theory predicts that in alternating-offer bargaining the threat to delay agreement is effectively empty when the proposer can also opt out after a rejection (high-tech market), while this is not the case when only the responder can do so (bazaar). First proposers therefore have much more bargaining power in the high-tech market and get significantly more in equilibrium. This paper reports about an experiment designed to test this prediction. It is also studied whether the observed differences between the two bargaining games can be explained by the presence of an effective delay threat. Our results confirm the theoretical predictions once we account for the observed presence of a significant fraction of inequity-averse types in our subject pool.