Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations

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Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations

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Gächter, Simon () (University of St. Gallen, CESifo and IZA Bonn)
Riedl, Arno (CREED, University of Amsterdam Tinbergen Institute and IZA Bonn)

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Abstract

Theoretical research on claims problems has concentrated on normative properties and axiomatizations of solution concepts. We complement these analyses by empirical evidence on the predictability of three classical solution concepts in a bankruptcy problem. We examine both people's impartial normative evaluations as well as their actual negotiation behavior in a bargaining with claims environment. We measure people's judgments on the normative attractiveness of solution concepts with the help of a survey and also observe actual agreements in a bargaining experiment with real money at stake. We find that the proportional solution is the normatively most attractive rule, whereas actual negotiation agreements are closest to the 'constrained equal award' solution.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1375.

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Length: 29 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1375

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Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

This paper has been announced in the following NEP Reports:

NEP-BEC-2004-11-07 (Business Economics)
NEP-EXP-2004-11-07 (Experimental Economics)

References listed on IDEAS
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Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-43, December. [Downloadable!] (restricted)
Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status In Markets," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 161-188, February. [Downloadable!] (restricted)

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This page was last updated on 2009-11-23.

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