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An experimental comparison between free negotiation and a multi-issue point mechanism

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We propose a multi-issue point mechanism to be used in conflict resolution situations. This mechanism extract “gains from trade” inherent in the differing valuation towards the various issues where conflict exists. In order to assess the performance of this mechanism vis-a-vis unconstrained communication, we run a series of controlled laboratory experiments and find that both mechanisms reach similar levels of welfare, but the multi issue point mechanism allows subjects to reach an agreement more swiftly. In order to analyse in detail the performance of both mechanisms we introduce a classical measure of conflict and see that when conflict is highest, free negotiation sustains most losses: (1) subjects need more time to reach an agreement; (2) the likelihood of gridlock (no agreement) increases.

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en

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http://eprints.lse.ac.uk/28735/

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