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Fairness motivation in bargaining

Birkeland, Sigbjørn
Working paper
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URI
http://hdl.handle.net/11250/163370
Date
2011-07
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  • Discussion papers (SAM) [578]
Abstract
In this paper, we develop a model that captures the potential conflict

between two individuals who follow different fairness principles in bargaining.

This model is used to analyse the infl

uence of fairness motivation

on the possibility of reaching an agreement in bargaining, and to examine

the properties of the agreement. We show that bargaining between two

individuals who are strongly fairness motivated, but who disagree about

what represents a fair division, ends in disagreement. This result contrasts

the standard bargaining model with individuals who are only motivated by

material self-interest, which always leads to agreement. Furthermore, by

applying the Nash bargaining solution, we study the influence

of fairness

motivation on the bargaining outcome. A fairness motivated individual

reaches an outcome that is closer to his fairness principle in bargaining

against an individual who is only motivated by material self-interest.
Publisher
Norwegian School of Economics, Department of Economics
Series
Discussion Papers;14/2011

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