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Online Research Seminar
3:00 pm, Thursday, 4 November 2021

Delegating bargaining to an intermediary agent is common practice in many situations. The proposer, while not actively bargaining, sets constraints on the intermediary agent’s offer. We study ultimatum games where proposers delegate bargaining to an intermediary agent by setting boundaries on either end of the offer. We find that after accounting for truncation, intermediaries treat these boundaries similarly to a non-binding proposer suggestion. Specifically, we benchmark on a nonbinding setting where the proposer simply states the offer he would like to have made. We find that specifying a constraint on the intermediary has the same effect as a suggestion once truncation is accounted for. This is true for both upper and lower bounds. We discuss the implications of these findings in terms of the importance of communication and the role of constraints in bargaining with intermediaries.

About the speaker

Ernan Haruvy Ph.D. Economics (University of Texas at Austin) is a full professor of marketing at McGill University, Director of the McGill Institute of Marketing and Chief Editor of the Review of Marketing Science and Associate Editor at Management Science.

He has published well-known articles, pioneering works on Level-k theory, economic models of human behaviour, including altruism, fairness, reciprocity, social norms, bounded rationality, learning, and reputation. He has also written well-known articles on asset markets, auctions, procurement, and channels.

He is active in multiple disciplines including marketing, psychology experimental and behavioural economics, finance, and operations management. He published in journals such as American Economic Review, Marketing Science, Journal of Marketing, Journal of Marketing Research and Journal of Finance. More information at https://www.mcgill.ca/desautels/ernan-haruvy