Ruhr Economic Papers

Ruhr Economic Papers #438

Unstructured Bargaining over an Endogenously Produced Surplus and Fairness Ideals – An Experiment

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

RUB, 08/2013, 40 S./p., 8 Euro, ISBN 978-3-86788-495-2 DOI: 10.4419/86788495

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Abstract

Fairness considerations are important determinants of behavior in unstructured bargaining situations with equal bargaining power. If the surplus over which the bargaining takes place was created by separate, individual efforts, several entitlement-related fairness ideals might be relevant. In our experiment we first elicit subjects’ fairness ideals using a questionnaire. In the following production phase each player generates output by luck, individual effort and talent. We analyze whether the elicited fairness ideals guide subjects’ behavior in the subsequent bargaining in which the joint output is distributed among two individuals. We find that bargaining claims deviate significantly from the elicited fairness ideals and are strongly related to performance if one individual had produced more than the partner. These findings contrast the previous literature on fairness ideals and enrich the findings on self-serving fairness.

JEL-Classification: C91, D39, D63

Keywords: Fairness; unstructured bargaining; self-serving fairness; opportunism

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