Exempting agents from any burden sharing: a lab-experimental study on the distribution of a monetary loss

Wulf Gaertner and Yi Li

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We present findings of an experimental study of negotiations over the share of a monetary loss. Groups of four agents with differing initial endowments must unanimously agree on the contribution that each member is expected to make so that a financial loss imposed on the group is covered. Two types of proposals are of particular interest: Either the agent with the lowest endowment or the agents with the lowest and second lowest endowment are to be exempted from any monetary contribution. These types of proposals can be related to alternative models of loss sharing that will be briefly discussed before presenting the experimental results. We find that exempting the agent with the lowest endowment only was expressed in 120 proposals, exempting the lowest and the second lowest agents only accounted for 50% of all 428 proposals. We consider two different treatments in case of no agreement among the group members, namely a random mechanism among all the proposals made before the bargaining procedure has ended, and, alternatively, a decision taken by the experimenter after bargaining time has elapsed. We also discuss a third type of proposal that we call “other exemptions” which contains rather nasty loss-division proposals that contradict the very idea of fairness and examine our findings in such contexts particularly under the aspect of gender difference.

Keywords: exemption from any contribution; experimental bargaining; gender differences; loss sharing (search for similar items in EconPapers)
JEL-codes: C91 D63 D71 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2025-09-03
New Economics Papers: this item is included in nep-exp
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Published in Journal of Economic Inequality, 3, September, 2025. ISSN: 1569-1721

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