Focal points in tacit bargaining problems: Experimental evidence

We use a new experimental design to test Schellingʹs hypotheses about the nature and effectiveness of focal points in tacit bargaining problems. In our design, as in many real-world bargaining problems, each playerʹs strategies are framed as proposals about what part of a stock of valuable objects she is to take, and there are payoff-irrelevant cues which define relations between players and objects. In line with Schellingʹs hypotheses, we find that such cues serve as powerful focal points. Their presence increases efficiency even in games where there is no efficient and equal division, and induces systematically unequal payoff distributions.