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Information, Uncertainty, and Subjective Entitlements in Bargaining

Emin Karagözoğlu () and Arno Riedl

No 42, Research Memorandum from Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR)

Abstract: More often than not production processes are the joint endeavor of people having different abilities and productivities. Such production processes and the associated surplus production are often not fully transparent in the sense that the relative contributions of involved agents are blurred; either by lack of information about the actual performance of collaborators or because of random noise in the production process or both. These variables likely influence the surplus sharing negotiations following the production. By means of a laboratory experiment, we systematically investigate their role for the whole bargaining process from opening offers to (dis)agreements and find that uncertainties in surplus production and (even) a very coarse performance information lead to bargaining asymmetries. In addition, we find that bargainers’ subjective entitlements are also influenced by performance information and the randomness inherent in the production process. These differences in subjective entitlements together with the differences in entitlements between better and worse performers influence the whole bargaining process and significantly contribute to the differences in bargaining outcomes. Keywords: bargaining; performance information; randomness in production process; entitlements; experiments.

Keywords: operations research and management science (search for similar items in EconPapers)
Date: 2010
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Working Paper: Information, Uncertainty, and Subjective Entitlements in Bargaining (2010) Downloads
Working Paper: Information, Uncertainty, and Subjective Entitlements in Bargaining (2010) Downloads
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