The Impact of Previous Action on Bargaining—An Experiment on the Emergence of Preferences for Fairness Norms

Thomas Neumann,Stephan Schosser,Bodo Vogt

doi:10.3390/g8030034

Abstract

The communication of participants to identify an acceptable bargaining outcome in the Nash bargaining game is all about fairness norms. Participants introduce fairness norms which yield a better outcome for themselves in order to convince the other participant of their bargaining proposal. Typically, these fairness norms are in line with theoretical predictions, which support a wide variety of different but fair outcomes the participants can choose from. In this experiment, we play two treatments of the Nash bargaining game: in one treatment, the participants play a dictator game prior to bargaining, and in the other treatment they do not. We find that participants who have not played the dictator game intensively discuss the outcome of the game and come to solutions closer to the equal split of the pie the longer they chat. This effect vanishes as soon as the participants have previous experience from a dictator game: instead of chatting, they establish the fairness norm introduced in the dictator game. Remarkably, if the dictator is unfair in the dictator game, he also gets a higher share of the pie in the Nash bargaining game.

Highlights

Bargaining is central in everyday interaction, and in computerized applications such as resource allocations in communication networks [1,2]
We investigate behavior in the Nash bargaining game [9], and show that by playing a dictator game prior to the bargaining game, the norms the participants agree upon can be manipulated
We investigate what norms the participants establish in the Nash bargaining game

Summary

Introduction

Bargaining is central in everyday interaction, and in computerized applications such as resource allocations in communication networks [1,2]. Experimental literature observed several different norms (e.g., [3,4]) to predict cooperative behavior. Literature investigating how norms are formed and how one can use them to influence future behavior is scarce. We investigate behavior in the Nash bargaining game [9], and show that by playing a dictator game prior to the bargaining game, the norms the participants agree upon can be manipulated. We argue that in order to understand individual outcomes in bargaining games (e.g., [10,11,12]), it is essential to know the history of a decision maker

Methods

Results

Conclusion