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On the Adjudication of Conflicting Claims: An Experimental Study

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Author Info
Carmen Herrero () (U. de Alicante e IVIE)
Juan D. Moreno-Ternero () (U. de Málaga, Universidad Pablo de Olavide y CORE, Universit´e catholique de Louvain)
Giovanni Ponti () (U. de Alicante y Università di Ferrara)
Abstract

This paper reports an experimental study on three well-known solutions for problems of adjudicating conflicting claims: the constrained equal awards, the proportional, and the constrained equal losses rules. We first let subjects play three games designed such that the unique equilibrium allocation coincides with the recommendation of one of these three rules. In addition, we let subjects play an additional game, that has the property that all (and only) strategy profiles in which players coordinate on the same rule constitute a strict Nash equilibrium. While in the first three games subjects’ play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device, especially when we frame the game as an hypothetical bankruptcy situation. We also administered a questionnaire to a different group of students, asking them to act as impartial arbitrators to solve (among others) the same problems played in the lab. Also in this case, respondents were sensitive to the framing of the questions, but the proportional rule was selected by the vast majority of respondents.

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Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 09.10.

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Length: 42 pages
Date of creation: Nov 2009
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Handle: RePEc:pab:wpaper:09.10

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Related research
Keywords: Claims problems; Proportional rule; Experimental Economics;

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances

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