Behind the Screens : Does the Coase Theorem Hold Online?

Rapid technological diffusion has led to a heavy reliance on digital communication media, fundamentally changing how people transact and coordinate. In this paper, we study how adopting digital communication impacts allocative efficiency and welfare distributions in a Coasian bargaining experiment. Compared to a baseline where subjects bargain face-to-face, we find that digital bargaining induces a 22.5 percentage point drop in efficient decision making and a more than doubling in self-regarding behavior. The effects are persistent as bargainers gain experience and are also larger when bargaining is a one-shot game and when we increase the strength of property rights