Strategic Play and Adaptive Learning in the Sealed-Bid Bargaining Mechanism

We report the results of two experiments on bilateral bargaining under the sealed-bid double auction mechanism in environments where theory calls for decidedly strategic play. The observed individual sellers' ask functions and buyers' bid functions, each based on 50 rounds of bargaining, are shown to be in good agreement with the Bayesian–Nash piecewise linear equilibrium solution of Chatterjee & Samuelson (1983). Although the game is played...