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Procedurally Fair Co-Determination with Endogeneous Value Uncertainty: An Experiment

Author

Listed:
  • Werner Güth

    (Max-Planck-Institute for Research on Collective Goods, 53113 Bonn, Germany)

  • Ludivine Martin

    (Luxembourg Institute of Socio-Economic Research (LISER), 4366 Esch-Sur-Alzette, Luxembourg
    IZA, 53113 Bonn, Germany
    CREM—Centre de Recherche en économie & Management, Université de Rennes (UMR CNRS 6211), 35065 Rennes, France)

  • Tibor Neugebauer

    (Department of Finance, University of Luxembourg, 1359 Luxembourg, Luxembourg)

  • Sotiria Xanalatou

    (Department of Finance, University of Luxembourg, 1359 Luxembourg, Luxembourg)

Abstract

We present an experimental test of a procedurally fair co-determination mechanism where group members reduce their value uncertainty before submitting bids for a joint project. The results suggest a relatively efficient mechanism, with unprofitable projects being largely rejected and profitable ones accepted. Repeated interactions tended to enhance the efficiency, while uncertain information reduced it. The subjects invested surprisingly little search effort to reduce the uncertainty about the costs and benefits, and appeared to trade off search costs against higher bids.

Suggested Citation

  • Werner Güth & Ludivine Martin & Tibor Neugebauer & Sotiria Xanalatou, 2025. "Procedurally Fair Co-Determination with Endogeneous Value Uncertainty: An Experiment," Games, MDPI, vol. 16(2), pages 1-28, April.
    • Handle: RePEc:gam:jgames:v:16:y:2025:i:2:p:19-:d:1639152
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    References listed on IDEAS

    as
    1. Werner Güth & Paul Pezanis-Christou, 2021. "An indirect evolutionary justification of risk neutral bidding in fair division games," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(1), pages 63-74, March.
    2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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