Pre-Commitment in Bargaining with Endogenous Credibility

We study whether negotiators adopt commitment tactics in bargaining, which was first proposed by Schelling (1956), and their choice of the credibility of commitment. In a modified ultimatum game experiment, the responder can pre-commit to a minimum acceptable offer (MAO) before an offer is proposed, meanwhile choosing the credibility of the commitment, which is measured by a cost of backing down (CBD) that is incurred if the responder accepts an offer lower than the MAO. We find that less than 40% of responders chose a CBD sufficiently high for their commitments to be fully credible, even though proposers were more likely to cave in and offer more when they did so. Female or inequity-averse responders were significantly more likely to make partially credible commitments. A further treatment, which informed responders of the corresponding proposer's minimum acceptable share, suggested that partially credible commitments were unlikely made to enlarge the contract zone.