Money or morality: fairness ideals in unstructured bargaining

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

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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
Article number0
Pages (from-to)655-675
Number of pages21
JournalSocial Choice and Welfare
Volume53
Issue number4
Early online date31 Jul 2019
DOIs
Publication statusPublished - 1 Dec 2019

Keywords

  • fairness
  • distributive justice
  • unstructured bargaining
  • Nash bargaining solution
  • self-serving fairness
  • opportunism

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