School of Economics and Finance

No. 445: Time Preferences: Do They Matter in Bargaining?

Paola Manzini , Queen Mary, University of London

October 1, 2001

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Experimental studies of bargaining generally impose time preferences' on subjects, in the sense that in case of disagreement, the experimenter reduces the size of the surplus bargained over by imposing exogenously some monetary cost. Contrary to this practice, in this study time preferences are first elicited in a preliminary phase, and then bargaining begins. I show that although subjects are sensitive to the timing of a monetary reward, this plays no role in determining bargaining behaviour. Furthermore, when the bargaining game is played in conventional experimental setting with monetary costs of delay, these do have an impact on subjects' conduct in negotiations.

J.E.L classification codes: C78, C91

Keywords:Bargaining, Time preferences, Experiments