Abstract
We consider how the outcome of bargaining varies with changes in the trade-off between equality, efficiency, and total-earnings maximization. We observe that subjects avoid an equal-earnings outcome if it is Pareto inefficient; a large proportion of bargaining pairs avoid an equal and Pareto efficient outcome in favor of one giving unequal and total-earnings maximizing payoffs, and this proportion increases when unequal outcomes imply larger earnings to one of the players, even though this also implies higher inequality; finally, we document a compromise effect that violates the independence of irrelevant alternatives condition.
Original language | English |
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Pages (from-to) | 1941–1970 |
Number of pages | 30 |
Journal | Journal of the European Economic Association |
Volume | 17 |
Issue number | 6 |
Early online date | 31 Aug 2018 |
DOIs | |
Publication status | Published - Dec 2019 |
Keywords
- bargaining
- efficiency
- equality
- communication
- experiment
- independence of irrelevant alternatives
Profiles
-
Anders Poulsen
- School of Economics - Associate Professor
- Centre for Behavioural and Experimental Social Science - Member
- Behavioural Economics - Member
- Environment, Resources and Conflict - Member
Person: Research Group Member, Academic, Teaching & Research