Procedurally Fair Co-Determination with Endogeneous Value Uncertainty: An Experiment

Werner Güth, Ludivine Martin (), Tibor Neugebauer () and Sotiria Xanalatou
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Werner Güth: Max-Planck-Institute for Research on Collective Goods
Ludivine Martin: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, LISER - Luxembourg Institute of Socio-Economic Research
Tibor Neugebauer: uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg
Sotiria Xanalatou: uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg

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Abstract: We present an experimental test of a procedurally fair co-determination mechanism where group members reduce their value uncertainty before submitting bids for a joint project. The results suggest a relatively efficient mechanism, with unprofitable projects being largely rejected and profitable ones accepted. Repeated interactions tended to enhance the efficiency, while uncertain information reduced it. The subjects invested surprisingly little search effort to reduce the uncertainty about the costs and benefits, and appeared to trade off search costs against higher bids. JEL Classification: C92; D70; D81; J52; L20

Keywords: corporate governance; joint venture; experiment; auction; uncertainty (search for similar items in EconPapers)
Date: 2025
Note: View the original document on HAL open archive server: https://hal.science/hal-05068612v1
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Published in Games, 2025, 16 (2), pp.19. ⟨10.3390/g16020019⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05068612

DOI: 10.3390/g16020019

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