Communication in Bargaining Under the Shadow of Conflict: An Experiment

We experimentally study how pre-play communication shapes bargaining under the shadow of conflict. In a two-stage game that combines a Nash demand bargaining with a Tullock contest, we compare complete and asymmetric information settings and allow one party to message his fighting strength to the opponent. Experimental results show that asymmetric information increases conflict and induces bluffing: weak types frequently send messages overstating their strength and make high demands, to which opponents partially concede. Strong types sometimes feign weakness by understating their strength while maintaining high demands, drawing opponents into conflict; however, this strategy does not improve their payoffs. Overall, communication does not reduce conflict under asymmetric information. By contrast, under complete information, communication modestly improves coordination. These results delineate when strategic messages facilitate agreement and when they undermine bargaining efficiency.