Market experience is a reference point in judgments of fairness

Holger Herz and Dmitry Taubinsky

No 128, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: People's desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model's predictions. We find that previous exposure to competitive pressure substantially and persistently reduces subjects' fairness concerns, making them more likely to accept low offers. Consistent with our theory, we also find that past experience has little effect on subjects' inclinations to treat others unfairly.

Keywords: Social preferences; reference points; fairness; bargaining (search for similar items in EconPapers)
JEL-codes: C78 C91 D01 D03 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-hme, nep-hpe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:128

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