Money or morality: fairness ideals in unstructured bargaining

Wolfgang J. Luhan, Odile Poulsen, Michael W.M. Roos

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2 Citations (Scopus)
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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.

Original languageEnglish
Pages (from-to)655-675
JournalSocial Choice and Welfare
Volume53
Issue number4
Early online date31 Jul 2019
DOIs
Publication statusPublished - Dec 2019

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