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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)

  • Ludivine Martin

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, LISER - Luxembourg Institute of Socio-Economic Research)

  • Tibor Neugebauer

    (uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg)

  • Sotiria Xanalatou

    (uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg)

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. JEL Classification: C92; D70; D81; J52; L20

Suggested Citation

  • Werner Güth & Ludivine Martin & Tibor Neugebauer & Sotiria Xanalatou, 2025. "Procedurally Fair Co-Determination with Endogeneous Value Uncertainty: An Experiment," Post-Print hal-05068612, HAL.
    • Handle: RePEc:hal:journl:hal-05068612
    DOI: 10.3390/g16020019
    Note: View the original document on HAL open archive server: https://hal.science/hal-05068612v1
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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