Rethinking the Fairness Hypothesis: Procedural Justice in Simple Bargaining Games

Abstract:     
I consider two new simple bargaining games in which two players bargain over division of a fixed amount of money. Both games are strategically equivalent to the dictator game, in that one player has the unilateral ability to determine the allocation. However, that player can instead choose to share decision-making power with the other. In this way, I take a broader view of fairness than past experiments, considering both distributive justice (how much I get) and procedural justice (the rules governing how I get it). First, players often decide to empower the other player, even though there is no strategic reason to do so, implying an innate concern with procedural justice. Second, divisions in these games are much more equitable than in traditional dictator games, suggesting that a fair procedure may elicit fair distribution. Thus, past rejection of the fairness hypothesis (arguing that fairness concerns would lead to similar distributions in the ultimatum and dictator games) may be due to a failure to account for fairness as both a distributive and procedural concern.

Keywords: justice, fairness, ultimatum, dictator, bargaining

JEL Classifications: C78, C92, D63

Working Paper Series