Reference dependent altruism in demand bargaining

Yves Breitmoser () and Jonathan Tan

Journal of Economic Behavior & Organization, 2013, vol. 92, issue C, 127-140

Abstract: We seek to extend our understanding of bargaining preferences, and do so experimentally using the three-player demand bargaining game. In this game, two non-proposers simultaneously state their demands, then the proposer offers, and at least one demand must be satisfied otherwise the proposal fails. Different preferences induce different behavioral patterns. Observed proposals tend to match the lower but not the higher of the two demands. Demands are around the equal split even with experience. This pattern is incompatible with continuous utility functions such as Fehr–Schmidt inequity aversion and CES altruism, which predict competitive demands, but compatible with discontinuous utilities, which we capture in a model of reference dependent altruism.

Keywords: Demand bargaining; Non-cooperative; Laboratory experiment; Social preferences; Reference dependence (search for similar items in EconPapers)
JEL-codes: C72 C78 D72 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:92:y:2013:i:c:p:127-140

DOI: 10.1016/j.jebo.2013.06.001

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