Abstract

This paper offers an experimental test of a version of Rubinstein’s bargaining model in which the players’ discount factors are unequal. We find that learning, rationality, and fairness are all significant in determining the outcome. In particular, we find that a model of myopic optimization over time predicts the sign of deviations in the opening proposal from the final undiscounted agreement in the previous period rather well. To explain the amplitude of the deviations, we then successfully fit a perturbed version of the model of myopic adjustment to the data that allows for a bias toward refusing inequitable offers