The Impact of Fairness on Decision Making - An Analysis of Different Video Experiments
AbstractExperimentally observed deviations of behavior from game theoretic predictions suggest that fairness does influence decision making. Fairness in the sense of equality has become an essential element of economic models aiming at explaining actual behavior (cf. Fehr and Schmidt, 1999; Bolton and Ockenfels, 2000). In this paper I will argue that equality is not the only fairness norm to be taken into account. More equity norms than equality exist, including inequality of payoffs. Since inequitable payoff allocations are advantageous for the one player and disadvantageous for the other, subjects may fall prey to a self-serving bias in their fairness perceptions. Opponents may adhere to different conceptions of fairness making agreement impossible. Using the video method (Hennig-Schmidt, 1999) I further show in a bargaining experiment that behavior is goal-oriented. Fairness criteria based on equity norms guide the formation and adaptation of aspiration levels.
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse14_2001.
Date of creation: Sep 2000
Date of revision: Feb 2002
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experimental economics; video experiments; fairness; equity principle; self-serving bias; aspiration levels; decision making;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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