Protocol for inexperienced Coasean bargainers confronting delay costs

Delay costs can affect the efficiency of the private resolution of environmental conflict between citizens who have minimal experience with Coasean-style bargaining. Using a laboratory experiment, this note examines whether two bargaining protocols — extensive form offers/counteroffers and cheap talk — can act as a substitute for bargaining experience. Our results suggest cheap talk was effective, but the extensive form protocol was not. Cheap talk reduced efficiency losses in two of three protocol designs by nearly 100 percentage points, an increase comparable to the gains achieved with experience.