Information, Uncertainty, and Subjective Entitlements in Bargaining
AbstractMore often than not production processes are the joint endeavor of people having different abilities and productivities. Such production processes and the associated surplus production are often not fully transparent in the sense that the relative contributions of involved agents are blurred; either by lack of information about the actual performance of collaborators or because of random noise in the production process or both. These variables likely influence the surplus sharing negotiations following the production. By means of a laboratory experiment, we systematically investigate their role for the whole bargaining process from opening offers to (dis)agreements and find that uncertainties in surplus production and (even) a very coarse performance information lead to bargaining asymmetries. In addition, we find that bargainers’ subjective entitlements are also influenced by performance information and the randomness inherent in the production process. These differences in subjective entitlements together with the differences in entitlements between better and worse performers influence the whole bargaining process and significantly contribute to the differences in bargaining outcomes. Keywords: bargaining; performance information; randomness in production process; entitlements; experiments.
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Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 042.
Date of creation: 2010
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operations research and management science;
Other versions of this item:
- Emin Karagözoglu & Arno Riedl, 2010. "Information, Uncertainty, and Subjective Entitlements in Bargaining," CESifo Working Paper Series 3133, CESifo Group Munich.
- Karagozoglu, Emin & Riedl, Arno, 2010. "Information, Uncertainty, and Subjective Entitlements in Bargaining," IZA Discussion Papers 5079, Institute for the Study of Labor (IZA).
- C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D29 - Microeconomics - - Production and Organizations - - - Other
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
- M - Business Administration and Business Economics; Marketing; Accounting
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