Experiment on Coasian Bargaining over Ex Ante Lotteries and Ex Post Rewards, An
Jason F. Shogren
July 1990 [90-WP 63]
Shogren, J.F. 1990. "Experiment on Coasian Bargaining over Ex Ante Lotteries and Ex Post Rewards, An." Working paper 90-WP 63. Center for Agricultural and Rural Development, Iowa State University.
We examine Coasian bargaining under uncertain payoff streams. subjects bargained over both an ex ante lottery and the ex post reward. The results indicate nearly 87 percent of all agreements were Pareto efficient. However, only 7.3 percent were mutually advantageous, while nearly 85 percent of all agreements split the reward equally.
Consequently, we remain cautious about policy recommendations based on the Coase theorem where uncertain payoffs exist. Finally we find no evidence supporting the proposition that a fundamental difference exists between bargaining behavior over the ex ante lottery and the ex post rewards of an uncertain event.