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Reference dependent altruism in demand bargaining

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  • Breitmoser, Yves
  • Tan, Jonathan H.W.

Abstract

We seek to extend our understanding of bargaining preferences, and do so experimentally using the three-player demand bargaining game. In this game, two non-proposers simultaneously state their demands, then the proposer offers, and at least one demand must be satisfied otherwise the proposal fails. Different preferences induce different behavioral patterns. Observed proposals tend to match the lower but not the higher of the two demands. Demands are around the equal split even with experience. This pattern is incompatible with continuous utility functions such as Fehr–Schmidt inequity aversion and CES altruism, which predict competitive demands, but compatible with discontinuous utilities, which we capture in a model of reference dependent altruism.

Suggested Citation

  • Breitmoser, Yves & Tan, Jonathan H.W., 2013. "Reference dependent altruism in demand bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 127-140.
  • Handle: RePEc:eee:jeborg:v:92:y:2013:i:c:p:127-140 DOI: 10.1016/j.jebo.2013.06.001
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    Cited by:

    1. Kritikos, Alexander S. & Tan, Jonathan H. W., 2014. "Would I Care if I Knew? Image Concerns and Social Confirmation in Giving," IZA Discussion Papers 8739, Institute for the Study of Labor (IZA).
    2. Pelligra, Vittorio & Reggiani, Tommaso G. & Zizzo, Daniel John, 2016. "Responding to (Un)Reasonable Requests," IZA Discussion Papers 10189, Institute for the Study of Labor (IZA).
    3. Breitmoser, Yves & Tan, Jonathan H.W., 2014. "Reference Dependent Altruism," MPRA Paper 52774, University Library of Munich, Germany.
    4. Kritikos, Alexander S. & Tan, Jonathan H.W., 2016. "Influence in the Face of Impunity," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 119-121.

    More about this item

    Keywords

    Demand bargaining; Non-cooperative; Laboratory experiment; Social preferences; Reference dependence;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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