EconPapers    
Economics at your fingertips  
 

Fairness considerations in joint venture formation

Tanjim Hossain (), Elizabeth Lyons () and Aloysius Siow ()
Additional contact information
Elizabeth Lyons: University of California
Aloysius Siow: University of Toronto

Experimental Economics, 2020, vol. 23, issue 3, No 3, 632-667

Abstract: Abstract Using a series of laboratory experiments in the context of bilateral bargaining over whether and how to engage in a joint venture, this paper shows that fairness concerns result in failures to undertake profitable joint production opportunities. We find that framing an opportunity as an employment relationship rather than as a partnership significantly reduces these inefficiencies and increases subjects’ welfare. Consistent with the theoretical model developed in the paper, text analysis and a follow-up experiment demonstrate that the lower likelihood of an efficient outcome in the partnership frame is driven primarily by a concern for fairness generated by the perceived social relationship associated with partnerships, and not by differences in the economic structure, cognition, subject motivation, or changes in relative bargaining power.

Keywords: Firm formation; Fairness concerns; Cooperative bargaining; Organizational structure (search for similar items in EconPapers)
JEL-codes: C92 D83 D91 L14 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10683-019-09626-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:expeco:v:23:y:2020:i:3:d:10.1007_s10683-019-09626-x

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10683/PS2

DOI: 10.1007/s10683-019-09626-x

Access Statistics for this article

Experimental Economics is currently edited by David J. Cooper, Lata Gangadharan and Charles N. Noussair

More articles in Experimental Economics from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2021-09-30
Handle: RePEc:kap:expeco:v:23:y:2020:i:3:d:10.1007_s10683-019-09626-x