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Unstructured Bargaining over an Endogenously Produced Surplus and Fairness Ideals – An Experiment

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  • Andreas Orland

    ()

  • Michael W.M. Roos

Abstract

Fairness considerations are important determinants of behavior in unstructured bargaining situations with equal bargaining power. If the surplus over which the bargaining takes place was created by separate, individual efforts, several entitlement-related fairness ideals might be relevant. In our experiment we first elicit subjects’ fairness ideals using a questionnaire. In the following production phase each player generates output by luck, individual effort and talent. We analyze whether the elicited fairness ideals guide subjects’ behavior in the subsequent bargaining in which the joint output is distributed among two individuals. We find that bargaining claims deviate significantly from the elicited fairness ideals and are strongly related to performance if one individual had produced more than the partner. These findings contrast the previous literature on fairness ideals and enrich the findings on self-serving fairness.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0439.

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Length: 40 pages
Date of creation: Aug 2013
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Handle: RePEc:rwi:repape:0439

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Keywords: Fairness; unstructured bargaining; self-serving fairness; opportunism;

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  1. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
  2. Cappelen, Alexander W. & Sørensen, Erik Ø. & Tungodden, Bertil, 2010. "Responsibility for what? Fairness and individual responsibility," European Economic Review, Elsevier, vol. 54(3), pages 429-441, April.
  3. Simon G�chter & Arno Riedl, 2003. "Moral Property Rights in Bargaining with Infeasible Claims," Tinbergen Institute Discussion Papers 03-055/1, Tinbergen Institute.
  4. Simon G�chter & Arno Riedl, 2004. "Dividing justly in Bargaining Problems with Claims," Tinbergen Institute Discussion Papers 04-044/1, Tinbergen Institute.
  5. Alexander W. Cappelen & Astri D. Hole & Erik Ø. Sørensen & Bertil Tungodden, 2005. "The Pluralism of Fairness Ideals: An Experimental Approach," CESifo Working Paper Series 1611, CESifo Group Munich.
  6. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
  7. Christoph Engel, 2011. "Dictator games: a meta study," Experimental Economics, Springer, vol. 14(4), pages 583-610, November.
  8. Oechssler, Jörg, 2009. "Searching beyond the lamppost: Let’s focus on economically relevant questions," Working Papers 0486, University of Heidelberg, Department of Economics.
  9. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
  10. Alexander Cappelen & Astri Hole & Erik Sørensen & Bertil Tungodden, 2011. "The importance of moral reflection and self-reported data in a dictator game with production," Social Choice and Welfare, Springer, vol. 36(1), pages 105-120, January.
  11. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
  12. Ismael Rodriguez-Lara & Luis Moreno-Garrido, 2012. "Self-interest and fairness: self-serving choices of justice principles," Experimental Economics, Springer, vol. 15(1), pages 158-175, March.
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