Information, Uncertainty, and Subjective Entitlements in Bargaining
More often than not production processes are the joint endeavor of people having different abilities and productivities. Such production processes and the associated surplus production are often not fully transparent in the sense that the relative contributions of involved agents are blurred; either by lack of information about the actual performance of collaborators or because of random noise in the production process or both. These variables likely influence the surplus sharing negotiations following the production. By means of a laboratory experiment, we systematically investigate their role for the whole bargaining process from opening offers to (dis)agreements and find that uncertainties in surplus production and (even) a very coarse performance information lead to bargaining asymmetries. In addition, we find that bargainers’ subjective entitlements are also influenced by performance information and the randomness inherent in the production process. These differences in subjective entitlements together with the differences in entitlements between better and worse performers influence the whole bargaining process and significantly contribute to the differences in bargaining outcomes. Keywords: bargaining; performance information; randomness in production process; entitlements; experiments.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 616, 6200 MD Maastricht|
Phone: +31 (0)43 38 83 830
Web page: http://www.maastrichtuniversity.nl/
More information through EDIRC
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.:
- Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
- Armin Falk & David Huffman & Gert Wagner & Jurgen Schupp & Thomas Dohmen & Uwe Sunde, 2005.
"Individual risk attitudes: New evidence from a large, representative, experimentally-validated survey,"
Framed Field Experiments
00140, The Field Experiments Website.
- Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Discussion Papers of DIW Berlin 511, DIW Berlin, German Institute for Economic Research.
- Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Juergen Schupp & Gert Wagner, 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," Working Papers 2096, The Field Experiments Website.
- Dohmen, Thomas J & Falk, Armin & Huffman, David & Schupp, Jürgen & Sunde, Uwe & Wagner, Gert Georg, 2006. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," CEPR Discussion Papers 5517, C.E.P.R. Discussion Papers.
- Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," IZA Discussion Papers 1730, Institute for the Study of Labor (IZA).
- Simon Gächter & Arno Riedl, 2005.
"Moral Property Rights in Bargaining with Infeasible Claims,"
INFORMS, vol. 51(2), pages 249-263, February.
- Simon Gächter & Arno Riedl, 2003. "Moral Property Rights in Bargaining with Infeasible Claims," Tinbergen Institute Discussion Papers 03-055/1, Tinbergen Institute.
- Anat R. Admati & Motty Perry, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 345-364.
- Jeremy Clark, 1998. "Fairness in Public Good Provision: An Investigation of Preferences for Equality and Proportionality," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 708-729, August.
- Roth, Alvin E & Murnighan, J Keith & Schoumaker, Francoise, 1988. "The Deadline Effect in Bargaining: Some Experimental Evidence," American Economic Review, American Economic Association, vol. 78(4), pages 806-23, September.
- Matthias Sutter & Ronald Bosman & Martin Kocher & Frans van Winden, 2008.
"Gender pairing and bargaining ? Beware the same sex!,"
2008-27, Faculty of Economics and Statistics, University of Innsbruck.
- Matthias Sutter & Ronald Bosman & Martin Kocher & Frans Winden, 2009. "Gender pairing and bargaining—Beware the same sex!," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 318-331, September.
- Sutter, Matthias & Bosman, R. & Kocher, Martin G. & van Winden, Frans, 2009. "Gender pairing and bargaining-Beware the same sex!," Munich Reprints in Economics 18217, University of Munich, Department of Economics.
- Walters, Amy E. & Stuhlmacher, Alice F. & Meyer, Lia L., 1998. "Gender and Negotiator Competitiveness: A Meta-analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(1), pages 1-29, October.
- Babcock, Linda & Loewenstein, George & Wang, Xianghong, 1995. "The relationship between uncertainty, the contract zone, and efficiency in a bargaining experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 27(3), pages 475-485, August.
- George Loewenstein & Don A. Moore, 2004. "When Ignorance Is Bliss: Information Exchange and Inefficiency in Bargaining," The Journal of Legal Studies, University of Chicago Press, vol. 33(1), pages 37-58, 01.
- Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-21, June.
- James K. Sebenius, 1992. "Negotiation Analysis: A Characterization and Review," Management Science, INFORMS, vol. 38(1), pages 18-38, January.
- Babcock, Linda, et al, 1995. "Biased Judgments of Fairness in Bargaining," American Economic Review, American Economic Association, vol. 85(5), pages 1337-43, December.
- Rubinstein, Ariel, 1985. "A Bargaining Model with Incomplete Information about Time Preferences," Econometrica, Econometric Society, vol. 53(5), pages 1151-72, September.
- 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.
- Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, number 9780198292241, December.
- Rockenbach,Bettina & Uhlich,Gerald, . "The negotiation agreement area "An experimental analysis of two person characteristic function game"," Discussion Paper Serie B 126, University of Bonn, Germany.
- Linda Babcock & Xianghong Wang & George Loewenstein, 1996. "Choosing the Wrong Pond: Social Comparisons in Negotiations That Reflect a Self-Serving Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 1-19.
- Pavlo Blavatskyy, 2009. "Betting on own knowledge: Experimental test of overconfidence," Journal of Risk and Uncertainty, Springer, vol. 38(1), pages 39-49, February.
- Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
- Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
- Thompson, Leigh & Loewenstein, George, 1992. "Egocentric interpretations of fairness and interpersonal conflict," Organizational Behavior and Human Decision Processes, Elsevier, vol. 51(2), pages 176-197, March.
When requesting a correction, please mention this item's handle: RePEc:unm:umamet:2010042. 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: (Leonne Portz)
If references are entirely missing, you can add them using this form.