We study two variants of an arbitrated bargaining problem where two parties lay proportional claims to an asset, and an arbiter has a final say on allocation. The two variants we study vary by the incentives to the arbiter. In one variant, the arbiter is incentivized proportionally to the lowest paid claimant and in the other, the arbiter is incentivized proportionally to the highest paid claimant. While the equal division equilibrium remains intact across both incentive schemes, the introduction of a bias in favor of the higher claimant creates additional equilibria involving all-or-nothing outcomes. These changes affect the relative attractiveness of equilibria and thereby influence equilibrium selection. Accordingly, the first variant leads to egalitarian claims whereas the second variant leads to extreme claims and subsequently to a high incidence of impasse in bargaining.

Citation: Han, J.J. & Haruvy, E. (Revise and Resubmit). Equilibrium Selection in Arbitrated Bargaining, Journal of the Economic Science Association.

[ResearchSquare][Data - Main][Data - Appendices][Code]

It is commonly accepted that enabling promises in the trust game would increase trust and trustworthiness. In their original paper, Charness and Dufwenberg (2006) enable promises in a trust game with a chance event and report that trust is higher for those who make a promise than for those who do not. This trust is not earned as trustworthiness is not greater by those who make a promise. We take this discovery a step further by asking whether a policy that enables promise-making increases welfare relative to a baseline in which promises are not allowed. We find that such a policy does not improve welfare. This is because, relative to a no-promise baseline, the increased trust in trustees who make a promise is offset by decreased trust in those who do not, though the non-promisors are nearly as trustworthy. The trustees, in turn, have rational reasons to be reluctant to make a promise, including one related to the chance event introduced by Charness and Dufwenberg (2006) which might result in an adverse outcome out of their control. To examine the implication of the chance event, we vary its presence and location, such that the location of the chance event is strategically irrelevant. We find that when promise-making is possible, a change in the location of chance does not affect trust and trustworthiness. However, once the possibility of making promise is removed, we find that placing the chance event prior to the trustee’s action increases trust but reduces trustworthiness—suggesting a miscalibration in the trustee’s beliefs about the trustor’s action.

Citation: Han, J.J. & Haruvy, E. (Submitted). On the Interaction of Chance and Promise.

[SSRN][Data]

In B2B markets, both buyers and sellers have a say in pricing and such price determining mechanism has long been the norm in the form of auctions and bargaining. These market designs have certainly enjoyed advances in technology for they have become more structured and capable of capturing more areas under the demand curve. Specifically, B2B auctions can now incorporate and automate a sophisticated scoring system which evaluates numerous dimensions, and B2B bargaining can now be automated to deal individually with each of tens of thousands of consumers. In this chapter, we present recent findings on the automated processes for both auctions and bargaining on a mass scale.

Citation: Han, J.J. & Haruvy, E. (2021). Participative pricing in B2B markets. In L. Dube, M. Cohen, N. Yang, & B. Monla(Eds.), Precision Retailing, University of Toronto Press.

[Book][Chapter 15]

Five experiments are reported to compare models of attitude formation about hot-button policy issues like climate change. In broad strokes, the deficit model states that incorrect opinions are a result of a lack of information, while the cultural cognition model states that opinions are formed to maximize congruence with the group that one affiliates with. The community of knowledge hypothesis takes an integrative position. It states that opinions are based on perceived knowledge, but that perceptions are partly determined by the knowledge that sits in the heads of others in the community. We use the fact that people's sense of understanding is affected by knowledge of others’ understanding to arbitrate among these views in the domain of public policy. In all experiments (N = 1767), we find that the contagious sense of understanding is nonpartisan and robust to experimental manipulations intended to eliminate it. While ideology clearly affects people's attitudes, sense of understanding does as well, but level of actual knowledge does not. And the extent to which people overestimate their own knowledge partly determines the extremity of their position. The pattern of results is most consistent with the community of knowledge hypothesis. Implications for climate policy are considered. 

Citation: Rabb, N., Han, J.J., & Sloman, S. (2020). How others drive our sense of understanding of policies. Behavioural Public Policy, 5(4), 454-479, doi:10.1017/bpp.2020.40

[Paper][Supplementary materials]

Counterfactual conditionals concern relations in other possible worlds. Most of these possible worlds refer to how a situation would have unfolded forward from a counterfactual assumption. In some cases, however, reasoning goes backward from the assumption, a phenomenon that is called backtracking. In the current study, we propose that people backtrack if and only if doing so will make a counterfactual claim true in the alternative world. We present evidence to support the proposal.

Citation: Han, J.J., Jimenez-Leal, W. & Sloman, S. (2014). Conditions for backtracking with counterfactual conditionals. Proceedings of the 36th Annual Conference of the Cognitive Science Society (pp. 2429-2434).

[Paper]

We explore how successive concessions and strategic delays can benefit all parties involved in B2B bargaining. Our econometric models provide insights on the optimal distribution of concessions at each stage of negotiation and on optimal prices that allow sellers to maximize profits while avoiding unsuccessful and unnecessarily lengthy negotiations.

Target journal: Journal of Marketing

In many situations, consumers can choose between a number of alternatives or use a costly search agent – what we refer to as "checking" to pick the best option for them. We investigate how the choice rate of the "checking" option change as a function of checking labeling. Specifically, in each trial of a 100 repeated choice task, the participants face five unmarked and uncorrelated alternatives (with a uniform distribution from 0 to 10 (EV=5) and a checking alternative which leads to the maximal payoff between the five alternatives minus the checking cost of 3 points (EV=5.6). Based on the two stage checking model (Roth et al., 2016; Roth 2020) and the PAS model (Erev et al., 2023) we hypothesize that the checking rate (i.e. the choice rate of the checking alternative) will vary according to the labeling of the checking alternative, with the lower checking rate in the no-label condition, higher checking rate when the checking alternative is labeled as the checking button and the highest checking rate with random (uninformative) checking label (e.g., a letter). Our experiments yielded partial evidence in support of the hypothesis.

Target journal: Psychological Science

This study investigates consumer perceptions of New Trail Brewing Co. (NTBC) using established scales for Brand Personality (Aaker, 1997), Brand Equity (Yi et al., 2003), and Perceived Product Quality (Su, 2018). A survey was distributed via QR-coded flyers placed in the NTBC’s taproom, yielding responses from 430 participants. NTBC was perceived as sincere (5.57), exciting (5.20), and competent (5.53) based on the 7-point brand personality scale. A structural equation model revealed that excitement and competence were positively related to perceived brand equity, controlling for potential exogenous factors. Another model also showed that excitement, competence, sincerity, and ruggedness predicted perceived product quality, with ruggedness being the only negative predictor. These findings indicate a clear misalignment between NTBC’s intended brand positioning and consumer perceptions, indicating a need for adjustments in brand strategy.

[Student Paper][Student Poster][Photos]

Git is a version control tool that is versatile like a Swiss army knife. It offers a range of functionalities that may be challenging to learn but gradually become clear with practice and a good primer (like this one) that will get you up to speed.

[Primer (Korean)][Primer (English)]