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Bargaining power does not matter when sharing losses – Experimental evidence of equal split in the Nash bargaining game

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  • Kroll, Eike B.
  • Morgenstern, Ralf
  • Neumann, Thomas
  • Schosser, Stephan
  • Vogt, Bodo

Abstract

While experimental research on social dilemmas focuses on the distribution of gains, we analyze social preferences in the case of losses. In this experimental study, the participants share a loss in a Nash bargaining game, but waiting time, instead of monetary losses, serves as an incentive. Further, we assume that the participants prefer less, rather than more, waiting time. Our experiment consists of four versions of the Nash bargaining game to allow for a comparison of four classical negotiation concepts (Nash, equal loss, equal gain, and Kalai–Smorodinsky) and an equal split of the overall waiting time. Our experimental evidence shows that an equal split better predicts the outcome of a Nash bargaining game involving losses than classical concepts do. Furthermore, the findings support that the participants resort to equal splits at the cost of their overall welfare.

Suggested Citation

  • Kroll, Eike B. & Morgenstern, Ralf & Neumann, Thomas & Schosser, Stephan & Vogt, Bodo, 2014. "Bargaining power does not matter when sharing losses – Experimental evidence of equal split in the Nash bargaining game," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 261-272.
  • Handle: RePEc:eee:jeborg:v:108:y:2014:i:c:p:261-272
    DOI: 10.1016/j.jebo.2014.10.009
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    References listed on IDEAS

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    1. repec:gam:jgames:v:8:y:2017:i:3:p:34-:d:108137 is not listed on IDEAS
    2. Stephan Schosser, 2015. "Who cares about the balderdash I spouted yesterday?* – An experiment on the volatility of bargaining norms –," FEMM Working Papers 150013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    3. Festjens, Anouk & Bruyneel, Sabrina & Diecidue, Enrico & Dewitte, Siegfried, 2015. "Time-based versus money-based decision making under risk: An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 50(C), pages 52-72.

    More about this item

    Keywords

    Bargaining; Losses; Equal split; Experimental economics;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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