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Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations

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  • Gächter, Simon

    () (University of Nottingham)

  • Riedl, Arno

    () (Maastricht University)

Abstract

Theoretical research on claims problems has concentrated on normative properties and axiomatizations of solution concepts. We complement these analyses by empirical evidence on the predictability of three classical solution concepts in a bankruptcy problem. We examine both people's impartial normative evaluations as well as their actual negotiation behavior in a bargaining with claims environment. We measure people's judgments on the normative attractiveness of solution concepts with the help of a survey and also observe actual agreements in a bargaining experiment with real money at stake. We find that the proportional solution is the normatively most attractive rule, whereas actual negotiation agreements are closest to the 'constrained equal award' solution.

Suggested Citation

  • Gächter, Simon & Riedl, Arno, 2004. "Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations," IZA Discussion Papers 1375, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1375
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    References listed on IDEAS

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    1. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status in Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 161-188.
    2. Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-1343, December.
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    More about this item

    Keywords

    equallosses rule; equal-awards rule; proportional rule; bankruptcy problems with claims; laboratory experiment; fairness; vignette;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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