Money or morality: fairness ideals in unstructured bargaining

Wolfgang Luhan, Odile Poulsen and Michael W. M. Roos ()
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Michael W. M. Roos: Ruhr-Universität Bochum

Social Choice and Welfare, 2019, vol. 53, issue 4, No 7, 655-675

Abstract: Abstract We augment the Nash bargaining solution by fairness ideals in order to predict the outcomes of unstructured bargaining after the individual production of a joint surplus. If production depends on individual effort, talent, and luck, fairness ideals might be based on the accountability principle. In a lab experiment with real production and unstructured bargaining, we investigate subjects’ fairness ideals, their bargaining behaviour, and the outcomes of the bargaining process. As impartial spectators, about 75% of the subjects hold meritocratic or libertarian fairness ideals. However, these ideals do not affect their bargaining behaviour which is strongly opportunistic. Therefore the fairness-augmented Nash solution with opportunistic fairness ideals predicts the bargaining outcome best.

Date: 2019
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DOI: 10.1007/s00355-019-01206-5

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