Unstructured Bargaining Over an Endogenously Produced Surplus and Fairness Ideals – An Experiment

42 Pages Posted: 13 Sep 2013

See all articles by Wolfgang J. Luhan

Wolfgang J. Luhan

University of Portsmouth - Faculty of Business - Department of Economics

Odile M. Poulsen

University of East Anglia (UEA) - School of Economic and Social Studies

Michael W. M. Roos

University of Dortmund - Lehrstuhl für Wirtschafts-un Sozialstatistik

Date Written: August 1, 2013

Abstract

Fairness considerations are important determinants of behavior in unstructured bargaining situations with equal bargaining power. If the surplus over which the bargaining takes place was created by separate, individual efforts, several entitlement related fairness ideals might be relevant. In our experiment we first elicit subjects’ fairness ideals using a questionnaire. In the following production phase each player generates output by luck, individual effort and talent. We analyze whether the elicited fairness ideals guide subjects’ behavior in the subsequent bargaining in which the joint output is distributed among two individuals. We find that bargaining claims deviate significantly from the elicited fairness ideals and are strongly related to performance if one individual had produced more than the partner. These findings contrast the previous literature on fairness ideals and enrich the findings on self-serving fairness.

Keywords: Fairness, unstructured bargaining, self-serving fairness, opportunism

JEL Classification: C91, D39, D63

Suggested Citation

Luhan, Wolfgang J. and Poulsen, Odile M. and Roos, Michael W. M., Unstructured Bargaining Over an Endogenously Produced Surplus and Fairness Ideals – An Experiment (August 1, 2013). Ruhr Economic Paper No. 438, Available at SSRN: https://ssrn.com/abstract=2325289 or http://dx.doi.org/10.2139/ssrn.2325289

Wolfgang J. Luhan (Contact Author)

University of Portsmouth - Faculty of Business - Department of Economics ( email )

Portsmouth PO4 8JF
United Kingdom

Odile M. Poulsen

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

Michael W. M. Roos

University of Dortmund - Lehrstuhl für Wirtschafts-un Sozialstatistik ( email )

D-44221 Dortmund
Germany

HOME PAGE: http://www.wiso.uni-dortmund.de/~gra-miro

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