Réttlæti og sérhagsmunir
[Justice and pressure groups]
This paper briefly summarizes recent research on justice, in particular Konow’s (2003) positive theory of justice. This research is then applied to recent events in Iceland: the attempt by Iceland’s largest bank to take over a savings bank. Shortly after the deal was announced the Icelandic Parliament quickly and unanimously passed a law which blocked it by creating a hold-up situation for the savings bank board: if it converts the bank to a corporation – as is necessary prior to takeover – an outside board will replace the present board. It is argued that the strong support for the law is puzzling when seen from the perspective of theories of pressure groups, regulatory threat and privatization. However, the paper claims that this may be explained by positive analysis of justice: the board played an ultimatum game against the general public and made what was perceived as an unfair proposal. The proposal was soundly rejected by the public, as usually happens when unfair offers are made in ultimatum games.
|Date of creation:||2004|
|Date of revision:|
|Publication status:||Published in Fjármálatíðindi 2.51(2004): pp. 78-86|
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- Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
- Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
- Amihai Glazer & Henry McMillan, 1992. "Pricing by the Firm Under Regulatory Threat," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 1089-1099.
- James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
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