Anchoring effect of focal points in bargaining: power and endowment

This paper aims to investigate, both theoretically and experimentally, the anchoring effect of focal points in sequential bargaining with varying structures. The author designs two variants of the Nash bargaining game, each permitting conflict, that encourage players to coordinate via focal points. Specifically, the author examines two types: power, defined by expected conflict payoffs, and endowment, which sets the status quo. Experimental results show that players exhibit notable rationality in both their demands and their decisions to back down. Crucially, power exerts a strong anchoring effect, while endowment does not. Strikingly, the opponent’s willingness to back down – interpreted as tacit recognition of the bargainer’s ownership claim – plummets from 65.79 to 12.5% after exposure to power as the focal point, highlighting the limited role of ownership legitimacy in shaping bargaining outcomes.