16. Field Experiments in Bargaining

Understanding price formation and surplus division in bargaining contexts has long been of interest to economists. Laboratory experiments contribute to our understanding of bargaining by inducing valuations and costs, which are usually unobserved in natural negotiation settings, and allow control over the negotiation process. Field experiments, on the other hand, allow economists to study bargaining in more natural contexts with higher external validity, and can be particularly useful when bargaining behavior draws on context-specific characteristics and experiences that may be stripped in lab settings or involves biases that would not surface under observability. In this chapter, we provide an overview of field experiments studying bargaining behavior and outcomes in a variety of settings, from bargaining for auto rickshaw to markets for livestock. We offer a methodological discussion, position field experiments in bargaining in the tradition of field experiments in economics at large, and highlight difficulties in the design and implementation of fieldwork for such environments. We also discuss potential areas and issues where future field experiments are of special importance for understanding price formation in bargaining.