Subject Directions
This document contains the text of the computerized directions for the experiments
reported in “Bargaining Over an Uncertain Value: Arbitration Mechanisms Compared”
A set of directions for subjects in the role of a worker are presented first and then
directions for subjects in the role of a firm are presented. There were only minimal
necessary changes to the text across roles and arbitration methods.
Each set of directions contained 6 pages.
Page 1 was seen by all subjects.
Page 2 was role dependent.
Page 3 was role and arbitration method dependent.
Page 4 was seen only by subjects in the final offer arbitration treatment.
Page 5 was role and arbitration method dependent. Subjects in the conventional
arbitration and final offer arbitration treatments saw the same page.
Page 6 was role and arbitration method dependent. This test was visible on the subject’s
screen during the entire experiment.
Worker Directions
Page 1
In this experiment you will have to make a series of decisions on the computer.
Each period you and a randomly selected counterpart will have to decide how to
allocate an amount of experimental money. You will be paid in cash at the end of
the experiment based on the decisions you and your counterpart make. For every
%s experimental dollars you earn you will be paid $US 1. If at any point you have a
question please raise your hand and an experimenter will approach you. Otherwise,
please do not talk during the experiment including this time while you and the
others are going through the directions. Press “Next” to go to the next page of
directions.
Page 2
Each period you are going to propose an allocation of money by moving the slider at
the top of your screen. Notice that there are two dark lines below the slider, each
corresponding to a different amount of money. There are two lines because neither
you nor your counterpart knows exactly how much money there is to allocate.
However, you both know that the amount of money is equal to one of these two
amounts. The actual amount to allocate is randomly determined and will be revealed
after you and your counterpart have both made a decision.
An allocation is defined as the amount of money that you will receive. Your
counterpart will receive the rest of the available money. Your counterpart will also
propose an allocation, an amount of money that you will receive, knowing that they
will receive the remainder of the available money. To propose an allocation you
must first move the slider to the desired amount. There is a table at the top of
your screen that shows you what the payoffs to you and your counterpart would be
if your proposed allocation were implemented. When you have placed the slider on
the amount that you wish to propose you must press “Send Proposed Allocation.”
Once you press this button in the experiment you cannot change your mind. Go
ahead and propose an allocation now, don’t forget to press “Send Proposed
Allocation.”
Page 3 - No Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is less than the allocation your counterpart
proposed, that is you placed the slider further to the left than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was more than your counterpart’s proposed
allocation, that is you placed the slider further to the right than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because you proposed to receive more than your counterpart proposed
for you to receive. In this case, both you and your counterpart will receive a payoff
of 0. Press “Next” to go to the next page of directions.
Page 3 - Conventional Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is less than the allocation your counterpart
proposed, that is you placed the slider further to the left than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was more than your counterpart’s proposed
allocation, that is you placed the slider further to the right than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because you proposed to receive more than your counterpart proposed
for you to receive. In this case, the computer will randomly determine the
allocation and you and your counterpart will have to pay the “cost if no allocation is
determined initially.” This cost will be automatically deducted from your payoff.
This cost information will be on your screen at all times. The computer knows how
much money there is to be allocated and ignores the other amount when picking the
allocation. Press “Next” to go to the next page of directions.
Page 3 - Final Offer Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is less than the allocation your counterpart
proposed, that is you placed the slider further to the left than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was more than your counterpart’s proposed
allocation, that is you placed the slider further to the right than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because you proposed to receive more than your counterpart proposed
for you to receive. In this case, the computer will determine the allocation and you
and your counterpart will have to pay the “cost if no allocation is determined
initially.” This cost will be automatically deducted from your payoff. This cost
information will be on your screen at all times. Press “Next” to find out how the
computer will determine the allocation in this case.
Page 4 – Final Offer Arbitration Treatment Only
If the proposals that you and your counterpart make are not compatible, then both
you and your counterpart will be asked to send another amount for the computer to
consider as an allocation. After you and your counterpart have both typed an
amount into the box on the right side of the screen and pressed “Send Amount” the
computer will determine the allocation. The computer knows how much money there
is to be allocated and ignores the other amount. To determine the allocation the
computer first randomly picks a potential allocation based on how much money is
available. The computer then compares this randomly determined amount to the
amounts you and your counterpart typed. Whichever amount sent by you or your
counterpart is closer to the amount the computer randomly picked will be used as
the allocation. This allocation will determine your payoff and your counterpart’s
payoff. In the event that the differences are the same, the computer will
randomly pick one of the two sent amounts to be the allocation. The allocation will
be either the amount you sent or the amount your counterpart sent.
Page 5 – No Arbitration Treatment
Now a table has appeared on your screen. After each period the following
information will be displayed in the bottom row of this table: 1) your proposed
allocation, 2) your counterpart’s proposed allocation, 3) the allocation, 4) your
payoff, and 5) your counterpart’s payoff. Recall that your payoff is the allocation.
Your counterpart’s payoff is the amount of money available minus the allocation.
Notice that your counterpart would lose money if the allocation were greater than
the amount of money available. If you have any questions please raise your hand.
If you are finished with the directions please press “Begin” and then wait quietly
for further instructions.
Page 5 – Final Offer and Conventional Arbitration Treatments
Now a table has appeared on your screen. After each period the following
information will be displayed in the bottom row of this table: 1) your proposed
allocation, 2) your counterpart’s proposed allocation, 3) the allocation, 4) your
payoff, and 5) your counterpart’s payoff. Recall that your payoff is the allocation
minus your cost if applicable. Your counterpart’s payoff is the amount of money
available minus the allocation minus his or her cost if applicable. Notice that your
counterpart would lose money if the allocation were greater than the amount of
money available. If you have any questions please raise your hand. If you are
finished with the directions please press “Begin” and then wait quietly for further
instructions.
Page 6 – No Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the left of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. You will receive the allocation and your
counterpart will receive the available money minus the allocation. If the proposals
are incompatible then both you and your counterpart will receive 0.
Page 6 – Conventional Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the top of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. You will receive the allocation and your
counterpart will receive the available money minus the allocation. If the proposals
are incompatible then the computer will randomly determine the allocation. In this
case the cost will be deducted from your payoff and your counterpart’s payoff.
Page 6 – Final Offer Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the top of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. You will receive the allocation and your
counterpart will receive the available money minus the allocation. If the proposals
are incompatible then you and your counterpart will be asked to send an amount for
the computer to consider. The computer will randomly select an amount and choose
as the allocation the amount sent by you or your counterpart, which is closest to
this randomly determined amount. In this case the cost will be deducted from your
payoff and your counterpart’s payoff.
Firm Directions
Page 1
In this experiment you will have to make a series of decisions on the computer.
Each period you and a randomly selected counterpart will have to decide how to
allocate an amount of experimental money. You will be paid in cash at the end of
the experiment based on the decisions you and your counterpart make. For every
%s experimental dollars you earn you will be paid $US 1. If at any point you have a
question please raise your hand and an experimenter will approach you. Otherwise,
please do not talk during the experiment including this time while you and the
others are going through the directions. Press “Next” to go to the next page of
directions.
Page 2
Each period you are going to propose an allocation of money by moving the slider at
the top of your screen. Notice that there are two dark lines below the slider, each
corresponding to a different amount of money. There are two lines because neither
you nor your counterpart knows exactly how much money there is to allocate.
However, you both know that the amount of money is equal to one of these two
amounts. The actual amount to allocate is randomly determined and will be revealed
after you and your counterpart have both made a decision.
An allocation is defined as the amount of money that your counterpart will receive.
You will receive the rest of the available money. Your counterpart will also propose
an allocation, an amount of money that your counterpart will receive, knowing that
you will receive the remainder of the available money. To propose an allocation you
must first move the slider to the desired amount. There is a table at the top of
your screen that shows you what the payoffs to you and your counterpart would be
if your proposed allocation were implemented. When you have placed the slider on
the amount that you wish to propose you must press “Send Proposed Allocation.”
Once you press this button in the experiment you cannot change your mind. Go
ahead and propose an allocation now, don’t forget to press “Send Proposed
Allocation.”
Page 3 - No Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is more than the allocation your counterpart
proposed, that is you placed the slider further to the right than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was less than your counterpart’s proposed
allocation, that is you placed the slider further to the left than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because your counterpart proposed to receive more than you proposed
for him or her to receive. In this case, both you and your counterpart will receive a
payoff of 0. Press “Next” to go to the next page of directions.
Page 3 - Conventional Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is more than the allocation your counterpart
proposed, that is you placed the slider further to the right than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was less than your counterpart’s proposed
allocation, that is you placed the slider further to the left than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because your counterpart proposed to receive more than you proposed
for him or her to receive. In this case, the computer will randomly determine the
allocation and you and your counterpart will have to pay the “cost if no allocation is
determined initially.” This cost will be automatically deducted from your payoff.
This cost information will be on your screen at all times. The computer knows how
much money there is to be allocated and ignores the other amount when picking the
allocation. Press “Next” to go to the next page of directions.
Page 3 - Final Offer Arbitration Treatment
Once you and your counterpart have each made a proposed allocation one of three
things could happen. If the allocation that you proposed is exactly equal to the
amount that your counterpart proposed then this is how the money will be allocated.
If instead the allocation you proposed is more than the allocation your counterpart
proposed, that is you placed the slider further to the right than did your
counterpart, the actual allocation will be the average of the two proposals.
However, if your proposed allocation was less than your counterpart’s proposed
allocation, that is you placed the slider further to the left than did your
counterpart, then the two proposals are not compatible. The proposals are not
compatible because your counterpart proposed to receive more than you proposed
for him or her to receive. In this case, the computer will determine the allocation
and you and your counterpart will have to pay the “cost if no allocation is
determined initially.” This cost will be automatically deducted from your payoff.
This cost information will be on your screen at all times. Press “Next” to find out
how the computer will determine the allocation in this case.
Page 4 – Final Offer Arbitration Treatment Only
If the proposals that you and your counterpart make are not compatible, then both
you and your counterpart will be asked to send another amount for the computer to
consider as an allocation. After you and your counterpart have both typed an
amount into the box on the right side of the screen and pressed “Send Amount” the
computer will determine the allocation. The computer knows how much money there
is to be allocated and ignores the other amount. To determine the allocation the
computer first randomly picks a potential allocation based on how much money is
available. The computer then compares this randomly determined amount to the
amounts you and your counterpart typed. Whichever amount sent by you or your
counterpart is closer to the amount the computer randomly picked will be used as
the allocation. This allocation will determine your payoff and your counterpart’s
payoff. In the event that the differences are the same, the computer will
randomly pick one of the two sent amounts to be the allocation. The allocation will
be either the amount you sent or the amount your counterpart sent.
Page 5 – No Arbitration Treatment
Now a table has appeared on your screen. After each period the following
information will be displayed in the bottom row of this table: 1) your proposed
allocation, 2) your counterpart’s proposed allocation, 3) the allocation, 4) your
payoff, and 5) your counterpart’s payoff. Recall that your payoff is the amount of
money available minus the allocation. Notice that you would lose money if the
allocation were greater than the amount of money available. Your counterpart’s
payoff is the allocation. If you have any questions please raise your hand. If you
are finished with the directions please press “Begin” and then wait quietly for
further instructions.
Page 5 – Final Offer and Conventional Arbitration Treatments
Now a table has appeared on your screen. After each period the following
information will be displayed in the bottom row of this table: 1) your proposed
allocation, 2) your counterpart’s proposed allocation, 3) the allocation, 4) your
payoff, and 5) your counterpart’s payoff. Recall that your payoff is the amount of
money available minus the allocation minus your cost if applicable. Notice that you
would lose money if the allocation were greater than the amount of money available.
Your counterpart’s payoff is the allocation minus his or her cost if applicable. If
you have any questions please raise your hand. If you are finished with the
directions please press “Begin” and then wait quietly for further instructions.
Page 6 – No Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the top of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. Your counterpart will receive the allocation
and you will receive the available money minus the allocation. If the proposals are
incompatible then both you and your counterpart will receive 0.
Page 6 – Conventional Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the top of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. Your counterpart will receive the allocation
and you will receive the available money minus the allocation. If the proposals are
incompatible then the computer will randomly determine the allocation. In this case
the cost will be deducted from your payoff and your counterpart’s payoff.
Page 6 – Final Offer Arbitration Treatment
Neither you nor your counterpart knows how much money there is to be allocated,
but you both know that it is one of the two amounts on the top of your screen. If
the proposed allocations are compatible then the actual allocation will be the
average of the proposed allocations. Your counterpart will receive the allocation
and you will receive the available money minus the allocation. If the proposals are
incompatible then you and your counterpart will be asked to send an amount for the
computer to consider. The computer will randomly select an amount and choose as
the allocation the amount sent by you or your counterpart, which is closest to this
randomly determined amount. In this case the cost will be deducted from your
payoff and your counterpart’s payoff.