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

Author

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  • Gächter, Simon

    (University of Nottingham)

  • Riedl, Arno

    (Maastricht University)

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.

Suggested Citation

  • Gächter, Simon & Riedl, Arno, 2004. "Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations," IZA Discussion Papers 1375, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1375
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    References listed on IDEAS

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    1. Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-1343, December.
    2. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status in Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 161-188.
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    Cited by:

    1. Carmen Herrero & Juan Moreno-Ternero & Giovanni Ponti, 2010. "On the adjudication of conflicting claims: an experimental study," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(1), pages 145-179, January.
    2. Simon Gächter & Arno Riedl, 2005. "Moral Property Rights in Bargaining with Infeasible Claims," Management Science, INFORMS, vol. 51(2), pages 249-263, February.

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    More about this item

    Keywords

    laboratory experiment; bankruptcy problems with claims; proportional rule; equal-awards rule; equallosses rule; fairness; vignette;
    All these keywords.

    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

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