Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options

Bernd Irlenbusch, Heike Hennig-Schmidt, Rainer Rilke and Gari Walkowitz ()

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: We experimentally investigate the relevance of (asymmetric) outside options in ultimatum bargaining. Building on the generalized equity principle formulated by Selten (1978) we derive three di erent equity rules. These equity rules can explain 43% of all o ers. Our within-subject design allows us to show that proposers apply the equity rules in a self-serving manner, i.e., proposers tend to follow the rules that suggest the highest payo for them. This tendency leads to high ine ciencies due to frequent rejections.

JEL-codes: C78 C91 D63 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (8)

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Working Paper: Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79975

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