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Fairness versus efficiency: how procedural fairness concerns affect coordination

Verena Kurz, Andreas Orland () and Kinga Posadzy ()
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Verena Kurz: University of Gothenburg
Kinga Posadzy: Linköping University

Experimental Economics, 2018, vol. 21, issue 3, No 7, 626 pages

Abstract: Abstract We investigate in a laboratory experiment whether procedural fairness concerns affect how well individuals are able to solve a coordination problem in a two-player Volunteer’s Dilemma. Subjects receive external action recommendations, either to volunteer or to abstain from it, in order to facilitate coordination and improve efficiency. We manipulate the fairness of the recommendation procedure by varying the probabilities of receiving the disadvantageous recommendation to volunteer between players. We find evidence that while recommendations improve overall efficiency regardless of their implications for expected payoffs, there are behavioural asymmetries depending on the recommendation: advantageous recommendations are followed less frequently than disadvantageous ones and beliefs about others’ actions are more pessimistic in the treatment with recommendations inducing unequal expected payoffs.

Keywords: Coordination; Correlated equilibrium; Recommendations; Procedural fairness; Volunteer’s Dilemma; Experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D63 D83 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination (2016) Downloads
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DOI: 10.1007/s10683-017-9540-5

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