Bargaining under Surveillance: Evidence from a Three-Person Ultimatum Game

Lauri Saaksvuori, Abhijit Ramalingam

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Abstract

This paper investigates how the transparency of decision-making affects preferences over distributional outcomes. We also examine what motivates individuals to voluntarily invest economic resources to monitor decision-making processes. We find that third-party monitoring does not affect distributional outcomes in a three-person ultimatum game. Our results show that a large majority of individuals is willing to pay for a right to monitor decision-making processes despite pecuniary incentives to the contrary. We observe that third-parties are over-confident in believing that an opportunity to scrutinize decision-making processes changes distributional outcomes for their own benefit. Our results suggest that people may over-estimate the effect of transparent decision-making on economic outcomes.
Original languageEnglish
Pages (from-to)66-78
Number of pages13
JournalJournal of Economic Psychology
Volume51
Early online date28 Aug 2015
DOIs
Publication statusPublished - Dec 2015

Keywords

  • Bargaining
  • Communication
  • Distributional preferences
  • Experiment
  • Negotiations
  • Surveillance

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