Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining
Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both regularities coherently by modeling heterogeneous social preferences, either self-interest or envy, of one bargaining party as private information in a three period game of bargaining and preference screening and signaling.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maria Montero, 2007.
"Inequity Aversion May Increase Inequity,"
Royal Economic Society, vol. 117(519), pages C192-C204, 03.
- Fehr, Ernst & Schmidt, Klaus M., 1999.
"A theory of fairness, competition, and cooperation,"
Munich Reprints in Economics
20650, University of Munich, Department of Economics.
- Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
- Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
- Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
- Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
- Ochs, Jack & Roth, Alvin E, 1989.
"An Experimental Study of Sequential Bargaining,"
American Economic Review,
American Economic Association, vol. 79(3), pages 355-84, June.
- Bolton, Gary E, 1991.
"A Comparative Model of Bargaining: Theory and Evidence,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1096-136, December.
- G. Bolton, 2010. "A comparative model of bargaining: theory and evidence," Levine's Working Paper Archive 263, David K. Levine.
- von Siemens, Ferdinand A., 2009. "Bargaining under incomplete information, fairness, and the hold-up problem," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 486-494, August.
- Driesen Bram & Perea Andrés & Peters Hans, 2009.
"Alternating offers bargaining with loss aversion,"
001, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Grossman, Sanford J. & Perry, Motty, 1986.
"Sequential bargaining under asymmetric information,"
Journal of Economic Theory,
Elsevier, vol. 39(1), pages 120-154, June.
- Sanford J. Grossman & Motty Perry, 1986. "Sequential Bargaining Under Asymmetric Information," NBER Technical Working Papers 0056, National Bureau of Economic Research, Inc.
- Kohler, Stefan, 2012. "Envy can promote more equal division in alternating-offer bargaining," MPRA Paper 40761, University Library of Munich, Germany.
- Goeree, Jacob K. & Holt, Charles A., 2000.
"Asymmetric inequality aversion and noisy behavior in alternating-offer bargaining games,"
European Economic Review,
Elsevier, vol. 44(4-6), pages 1079-1089, May.
- Jacob K. Goeree & Charles A. Holt, . "Asymmetric Inequality Aversion and Noisy Behavior in Alternating-Offer Bargaining Games," Virginia Economics Online Papers 329, University of Virginia, Department of Economics.
- Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
- Rasch, Alexander & Wambach, Achim & Wiener, Kristina, 2012. "Bargaining and inequity aversion: On the efficiency of the double auction," Economics Letters, Elsevier, vol. 114(2), pages 178-181.
- Peter C. Cramton, 1992.
"Strategic Delay in Bargaining with Two-Sided Uncertainty,"
Review of Economic Studies,
Oxford University Press, vol. 59(1), pages 205-225.
- Peter Cramton, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Papers of Peter Cramton 92res, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
- Ausubel, Lawrence M. & Deneckere, Raymond J., 1989. "A direct mechanism characterization of sequential bargaining with one-sided incomplete information," Journal of Economic Theory, Elsevier, vol. 48(1), pages 18-46, June.
- Stefan Kohler, 2014.
"Guilt causes equal or unequal division in alternating-offer bargaining,"
AccessEcon, vol. 34(3), pages 1611-1617.
- Kohler, Stefan, 2012. "Guilt causes equal or unequal division in alternating-offer bargaining," MPRA Paper 40760, University Library of Munich, Germany.
- Joel Sobel & Ichiro Takahashi, 1983. "A Multistage Model of Bargaining," Review of Economic Studies, Oxford University Press, vol. 50(3), pages 411-426.
- Stefan Kohler, 2005.
"Fairness vs. Social Welfare in Experimental Decisions,"
Economics Working Papers
ECO2005/11, European University Institute.
- Jonathan Tan & Friedel Bolle, 2006. "On the Relative Strengths of Altruism and Fairness," Theory and Decision, Springer, vol. 60(1), pages 35-67, 02.
- Srivastava, Joydeep, 2001. "The Role of Inferences in Sequential Bargaining with One-Sided Incomplete Information: Some Experimental Evidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 85(1), pages 166-187, May.
When requesting a correction, please mention this item's handle: RePEc:gam:jgames:v:3:y:2012:i:3:p:119-137:d:20059. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (XML Conversion Team)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.