An experimental study of buyer-seller negotiation : self-Interest versus other-regarding behavior

Abstract

This research explores the degree to which self-interest and other-regarding motives direct bargaining behavior in a controlled bargaining experiment. To achieve our goal we study simple bargaining between a buyer and a seller in a scenario that is rich enough to allow for five possible theoretical resolutions that can be ranked by the weight they put on unselfish behavior. Although none of the tested model performed uniformly best, behavioral regularities do emerge which suggest that bargainers are motivated first and formost by individual incentives. Other-regarding behavior is only constraint on the maximization problem. A new parametric model intended to capture the motivational dynamics illustrated by the observed regularities is proposed and its efficacy is assessed. The implications for bargaining and future directions are discussed