Reasons for Conflict: Lessons from Bargaining Experiments

Abstract

In this paper we experimentally study the effects of fairness, spite, and reputation formation on conflict. We show that fairness preferences are a potential source of conflict and that intentions play an important role in the perception of fairness. Further, we show that feelings of spite may affect the occurrence of conflict. Finally, we study reputation formation as a possible source of conflict. We show that people invest in a reputation of being a tough bargainer. This does not automatically increase conflict, however. The reason is that through reputation, information about one’s opponent is much better than in anonymous bargaining. (JEL: A 13, D 63, D 23, C 92, K 42)