SMU SOE Online Seminar (Sep 30, 2021, 4.00pm-5.30pm): Patience is Power: Bargaining and Payoff Delay

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TOPIC:

PATIENCE IS POWER: BARGAINING AND PAYOFF DELAY

ABSTRACT We provide causal evidence that patience is a significant source of bargaining power. To do so, we first generalize the Rubinstein (1982) bargaining model to any positive discounting, maintaining only the assumption that preferences are dynamically consistent across bargaining rounds, and characterize the unique equilibrium. We then experimentally implement a version of this game, where bargaining delay is negligible (frequent offers), so that dynamic consistency holds by design, while bargainers nonetheless face significant payoff delay upon disagreement, and we induce different time preferences by randomly assigning individuals their own payoff delay profile (week or month per round, with or without front-end delay). Our leading treatment tests the prediction of a general patience advantage, independent of any details of discounting, which we strongly confirm. Additional treatments show that this advantage hinges on the presence of immediate payoffs and reject exponential discounting in favor of present-biased discounting. Keywords:Alternating-Offers Bargaining, Time Preferences, Present Bias, Laboratory Experiments JEL Codes: C78, C91, D03 Click here to view the paper. Click here to view the CV.		This seminar will be held virtually via Zoom. A confirmation email with the Zoom details will be sent to the registered email by 29 September 2021.
		PRESENTER Jeongbin Kim National University of Singapore
		RESEARCH FIELDS Experimental Economics Behavioral Economics Microeconomic Theory
		DATE: 30 September 2021 (Thursday)
		TIME: 4.00pm - 5.30pm

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