IDEAS home Printed from https://ideas.repec.org/a/gam/jgames/v8y2017i4p44-d115367.html
   My bibliography  Save this article

Moral Entitlements and Aspiration Formation in Asymmetric Bargaining: Experimental Evidence from Germany and China

Author

Listed:
  • Heike Hennig-Schmidt

    (Economics Department, Bonn University, 53113 Bonn, Germany; Institute of Health and Society, Department of Health Management and Health Economics, University of Oslo, 0450 Oslo, Norway)

  • Gari Walkowitz

    (Department of Corporate Development and Business Ethics, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany)

Abstract

Using a unique experimental data set, we investigate how asymmetric legal rights shape bargainers’ aspiration levels through moral entitlements derived from equity norms and number prominence. Aspiration formation is typically hard to observe in real life. Our study involves 15 negotiations from Germany and China. Over the course of the negotiation, bargainers discuss the distribution of an amount of money by alternating offers until they consent or break off. Legal rights are randomly assigned by asymmetric outside options. We videotape and code the in-group discussions. In total, verbal data from 30 groups, 1100 pages of transcripts, and 65 h of discussions are content-analyzed. Our main finding is that strong groups derive and defend moral entitlements from equity concerns with regard to their outside options. They strive for equitable but unequal distributions (e.g., proportional split and split the difference). Moral entitlements materialize in the recorded aspiration levels and final payoffs, which exceed the equal split. By contrast, weak groups aim at equality. Over the course of the negotiation, equity tends to lose, while the prominence of round numbers gains importance. Similarities between the subject pools are found in that equity and prominence are both decisive for the formation of aspiration levels. Chinese negotiations are characterized by long periods of stagnation, only minimal concessions, and the communication of false goals. By contrast, Germans steadily reduce their goals and make concessions.

Suggested Citation

  • Heike Hennig-Schmidt & Gari Walkowitz, 2017. "Moral Entitlements and Aspiration Formation in Asymmetric Bargaining: Experimental Evidence from Germany and China," Games, MDPI, vol. 8(4), pages 1-25, October.
  • Handle: RePEc:gam:jgames:v:8:y:2017:i:4:p:44-:d:115367
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-4336/8/4/44/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2073-4336/8/4/44/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Drew Fudenberg & David K. Levine & Jean Tirole, 1987. "Incomplete Information Bargaining with Outside Opportunities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(1), pages 37-50.
    3. Rode, Julian & Le Menestrel, Marc, 2011. "The influence of decision power on distributive fairness," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 246-255, August.
    4. Akira Okada & Arno Riedl, 1999. "When Culture does not matter: Experimental Evidence from Coalition Formation Ultimatum Games in Austria and Japan," Tinbergen Institute Discussion Papers 99-043/1, Tinbergen Institute.
    5. Simon G�chter & Arno Riedl, "undated". "Moral Property Rights in Bargaining," IEW - Working Papers 113, Institute for Empirical Research in Economics - University of Zurich.
    6. Armin Falk & James J. Heckman, 2009. "Lab Experiments are a Major Source of Knowledge in the Social Sciences," Working Papers 200935, Geary Institute, University College Dublin.
    7. Ronald Bosman & Heike Hennig-Schmidt & Frans Winden, 2006. "Exploring group decision making in a power-to-take experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(1), pages 35-51, April.
    8. Heike Hennig-Schmidt & Gari Walkowitz, 2015. "Negotiations among Chinese and Germans - An Experimental Case Study," Cologne Graduate School Working Paper Series 06-01, Cologne Graduate School in Management, Economics and Social Sciences.
    9. Heike Hennig-Schmidt & Bernd Irlenbusch & Rainer Michael Rilke & Gari Walkowitz, 2018. "Asymmetric outside options in ultimatum bargaining: a systematic analysis," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 301-329, March.
    10. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    11. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    12. Jordi Brandts & Tatsuyoshi Saijo & Arthur Schram, 2004. "How Universal is Behavior? A Four Country Comparison of Spite and Cooperation in Voluntary Contribution Mechanisms," Public Choice, Springer, vol. 119(3_4), pages 381-424, June.
    13. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    14. Ismael Rodriguez-Lara & Luis Moreno-Garrido, 2012. "Self-interest and fairness: self-serving choices of justice principles," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 158-175, March.
    15. Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-1095, December.
    16. Cappelen, Alexander W. & Sørensen, Erik Ø. & Tungodden, Bertil, 2010. "Responsibility for what? Fairness and individual responsibility," European Economic Review, Elsevier, vol. 54(3), pages 429-441, April.
    17. Asheim, Geir B., 1992. "A unique solution to n-person sequential bargaining," Games and Economic Behavior, Elsevier, vol. 4(2), pages 169-181, April.
    18. Roth, Alvin E & Murnighan, J Keith & Schoumaker, Francoise, 1988. "The Deadline Effect in Bargaining: Some Experimental Evidence," American Economic Review, American Economic Association, vol. 78(4), pages 806-823, September.
    19. Konow, James, 1996. "A positive theory of economic fairness," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 13-35, October.
    20. Kagel, John H. & Kim, Chung & Moser, Donald, 1996. "Fairness in Ultimatum Games with Asymmetric Information and Asymmetric Payoffs," Games and Economic Behavior, Elsevier, vol. 13(1), pages 100-110, March.
    21. Jeswald W. Salacuse, 1999. "Intercultural Negotiation in International Business," Group Decision and Negotiation, Springer, vol. 8(3), pages 217-236, May.
    22. Armin Falk & Stephan Meier & Christian Zehnder, 2013. "Do Lab Experiments Misrepresent Social Preferences? The Case Of Self-Selected Student Samples," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 839-852, August.
    23. Majid Sheikhmohammady & D. Marc Kilgour & Keith W. Hipel, 2010. "Modeling the Caspian Sea Negotiations," Group Decision and Negotiation, Springer, vol. 19(2), pages 149-168, March.
    24. Binmore, Ken & Morgan, Peter & Snaked, Avner & Sutton, John, 1991. "Do people exploit their bargaining power? An experimental study," Games and Economic Behavior, Elsevier, vol. 3(3), pages 295-322, August.
    25. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
    26. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June.
    27. Simon Gächter & Arno Riedl, 2005. "Moral Property Rights in Bargaining with Infeasible Claims," Management Science, INFORMS, vol. 51(2), pages 249-263, February.
    28. Gantner, Anita & Guth, Werner & Konigstein, Manfred, 2001. "Equitable choices in bargaining games with joint production," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 209-225, October.
    29. Amrita Narlikar, 2006. "Fairness in International Trade Negotiations: Developing Countries in the GATT and WTO," The World Economy, Wiley Blackwell, vol. 29(8), pages 1005-1029, August.
    30. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
    31. Norman Frohlich & Joe Oppenheimer & Anja Kurki, 2004. "Modeling Other-Regarding Preferences and an Experimental Test," Public Choice, Springer, vol. 119(1_2), pages 91-117, April.
    32. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
    33. Jeremy Clark, 1998. "Fairness in Public Good Provision: An Investigation of Preferences for Equality and Proportionality," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 708-729, August.
    34. Schlicht, Ekkehart, 1998. "On Custom in the Economy," OUP Catalogue, Oxford University Press, number 9780198292241.
    35. Faure, Guy Olivier & Fang, Tony, 2008. "Changing Chinese values: Keeping up with paradoxes," International Business Review, Elsevier, vol. 17(2), pages 194-207, April.
    36. Rodriguez-Lara, Ismael, 2016. "Equity and bargaining power in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 144-165.
    37. Sven Fischer, 2005. "Inequality Aversion in Ultimatum Games with Asymmetric Conflict Payoffs - A Theoretical and Experimental Analysis -," Papers on Strategic Interaction 2005-36, Max Planck Institute of Economics, Strategic Interaction Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark Alfano & Hannes Rusch & Matthias Uhl, 2018. "Ethics, Morality, and Game Theory," Games, MDPI, vol. 9(2), pages 1-4, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heike Hennig-Schmidt & Bernd Irlenbusch & Rainer Michael Rilke & Gari Walkowitz, 2018. "Asymmetric outside options in ultimatum bargaining: a systematic analysis," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 301-329, March.
    2. Rodriguez-Lara, Ismael, 2016. "Equity and bargaining power in ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 144-165.
    3. Ismael Rodriguez-Lara & Luis Moreno-Garrido, 2012. "Self-interest and fairness: self-serving choices of justice principles," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 158-175, March.
    4. Gantner, Anita & Horn, Kristian & Kerschbamer, Rudolf, 2016. "Fair and efficient division through unanimity bargaining when claims are subjective," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 56-73.
    5. James Konow & Tatsuyoshi Saijo & Kenju Akai, 2008. "Morals and Mores? Experimental Evidence on Equity and Equality from the US and Japan," Levine's Working Paper Archive 122247000000002055, David K. Levine.
    6. Hennig-Schmidt, Heike & Irlenbusch, Bernd & Rilke, Rainer Michael & Walkowitz, Gari, 2013. "Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options," IZA Discussion Papers 7625, Institute of Labor Economics (IZA).
    7. Emin Karagözoglu & Arno Riedl, 2010. "Information, Uncertainty, and Subjective Entitlements in Bargaining," CESifo Working Paper Series 3133, CESifo.
    8. Anita Gantner & Kristian Horn & Rudolf Kerschbamer, 2013. "Fair Division in Unanimity Bargaining with Subjective Claims," Working Papers 2013-31, Faculty of Economics and Statistics, Universität Innsbruck.
    9. Elena Cettolin & Arno Riedl, 2017. "Justice Under Uncertainty," Management Science, INFORMS, vol. 63(11), pages 3739-3759, November.
    10. Wolfgang J. Luhan & Odile Poulsen & Michael W. M. Roos, 2019. "Money or morality: fairness ideals in unstructured bargaining," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(4), pages 655-675, December.
    11. Konow, James & Saijo, Tatsuyoshi & Akai, Kenju, 2016. "Equity versus Equality," MPRA Paper 75376, University Library of Munich, Germany.
    12. Eisenkopf, Gerald & Fischbacher, Urs & Föllmi-Heusi, Franziska, 2013. "Unequal opportunities and distributive justice," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 51-61.
    13. Ridinger, Garret, 2018. "Ownership, punishment, and norms in a real-effort bargaining experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 382-402.
    14. Cappelen, Alexander W. & Luttens, Roland I. & Sørensen, Erik Ø. & Tungodden, Bertil, 2015. "Fairness in bankruptcy situations: an experimental study," Discussion Paper Series in Economics 17/2015, Norwegian School of Economics, Department of Economics.
    15. Feltovich, Nick, 2019. "Is earned bargaining power more fully exploited?," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 152-180.
    16. Ismael Rodriguez-Lara & Luis Moreno-Garrido, 2012. "Modeling Inequity Aversion in a Dictator Game with Production," Games, MDPI, vol. 3(4), pages 1-12, October.
    17. Simon G�chter & Arno Riedl, "undated". "Moral Property Rights in Bargaining," IEW - Working Papers 113, Institute for Empirical Research in Economics - University of Zurich.
    18. Ubeda, Paloma, 2014. "The consistency of fairness rules: An experimental study," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 88-100.
    19. Gill, David & Stone, Rebecca, 2010. "Fairness and desert in tournaments," Games and Economic Behavior, Elsevier, vol. 69(2), pages 346-364, July.
    20. Urs Fischbacher & Nadja Kairies-Schwarz & Ulrike Stefani, 2017. "Non-additivity and the Salience of Marginal Productivities: Experimental Evidence on Distributive Fairness," Economica, London School of Economics and Political Science, vol. 84(336), pages 587-610, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jgames:v:8:y:2017:i:4:p:44-:d:115367. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.