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Self-serving invocations of shared and asymmetric history in negotiations

Linda Dezső and George Loewenstein ()

European Economic Review, 2019, vol. 120, issue C

Abstract: The existence of an asymmetric history between bargainers can trigger self-serving beliefs about the fair settlement of a subsequent dispute, ultimately leading to bargaining impasse. In a two-stage bargaining experiment we demonstrate that dyads who share a history that produced wealth asymmetries between them are less likely to settle in a subsequent negotiation than when the same wealth asymmetry stems from negotiators’ independent histories. When negotiators share an asymmetric history, the individual who previously lost out in the first stage believes that s/he deserves compensation in the second stage, but the individual who prevailed in the first stage believes that compensation is not warranted. These divergent, self-serving views about a fair settlement – and the resulting irreconcilable demands – lead to bargaining impasse. We find, further, that unbiased judges side with the losers in the first stage; they believe that it is fair for them to be compensated in the second stage. Indeed, this is true, albeit to a lesser extent, even if the winner and loser had not directly interacted with one another – i.e., if their history is not shared.

Keywords: History; Asymmetry; Self-serving beliefs; Fairness; Bargaining impasse (search for similar items in EconPapers)
JEL-codes: C70 D31 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:120:y:2019:i:c:s0014292119301618

DOI: 10.1016/j.euroecorev.2019.103309

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