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Reference dependent altruism in demand bargaining

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  • Breitmoser, Yves
  • Tan, Jonathan H.W.

Abstract

We seek to extend our understanding of bargaining preferences, and do so experimentally using the three-player demand bargaining game. In this game, two non-proposers simultaneously state their demands, then the proposer offers, and at least one demand must be satisfied otherwise the proposal fails. Different preferences induce different behavioral patterns. Observed proposals tend to match the lower but not the higher of the two demands. Demands are around the equal split even with experience. This pattern is incompatible with continuous utility functions such as Fehr–Schmidt inequity aversion and CES altruism, which predict competitive demands, but compatible with discontinuous utilities, which we capture in a model of reference dependent altruism.

Suggested Citation

  • Breitmoser, Yves & Tan, Jonathan H.W., 2013. "Reference dependent altruism in demand bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 127-140.
    • Handle: RePEc:eee:jeborg:v:92:y:2013:i:c:p:127-140
    DOI: 10.1016/j.jebo.2013.06.001
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    Cited by:

    1. Kritikos, Alexander S. & Tan, Jonathan H. W., 2014. "Would I Care if I Knew? Image Concerns and Social Confirmation in Giving," IZA Discussion Papers 8739, Institute of Labor Economics (IZA).
    2. te Velde, Vera L., 2018. "Beliefs-based altruism as an alternative explanation for social signaling behaviors," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 177-191.
    3. Tetsuo Yamamori & Kazuyuki Iwata, 2023. "Wage claim detracts reciprocity in labor relations: experimental study of gift exchange games," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(3), pages 573-597, July.
    4. Pelligra, Vittorio & Reggiani, Tommaso G. & Zizzo, Daniel John, 2016. "Responding to (Un)Reasonable Requests," IZA Discussion Papers 10189, Institute of Labor Economics (IZA).
    5. Lotti, Lorenzo, 2020. "Generosity during Covid-19 the effect of social distancing and framing on donations in dictator games," MPRA Paper 102144, University Library of Munich, Germany.
    6. Lotti, Lorenzo, 2020. "Generosity during Covid-19 the effect of social distancing and framing on donations in dictator games," MPRA Paper 103826, University Library of Munich, Germany.
    7. Breitmoser, Yves & Tan, Jonathan H.W., 2014. "Reference Dependent Altruism," MPRA Paper 52774, University Library of Munich, Germany.
    8. Benistant, Julien & Suchon, Rémi, 2021. "It does (not) get better: Reference income violation and altruism," Journal of Economic Psychology, Elsevier, vol. 85(C).
    9. Tetsuo Yamamori & Kazuyuki Iwata, 2019. "Endogenous Social Preferences in Bargaining and Contract Enforcement," Working Papers e134, Tokyo Center for Economic Research.
    10. Kritikos, Alexander S. & Tan, Jonathan H.W., 2016. "Influence in the face of impunity," Economics Letters, Elsevier, vol. 141(C), pages 119-121.
    11. Julien Benistant & Remi Suchon, 2020. "It Does (not) Get Better: Expected Income Violation and Altruism," Working Papers ECARES 2020-35, ULB -- Universite Libre de Bruxelles.
    12. Fiedler, Susann & Hillenbrand, Adrian, 2020. "Gain-loss framing in interdependent choice," Games and Economic Behavior, Elsevier, vol. 121(C), pages 232-251.
    13. Tan, Jonathan H W & Bolle, Friedel, 2023. "Intragroup punishment and intergroup conflict aversion weaken intragroup cooperation in finitely repeated games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    14. Breitmoser, Yves & Tan, Jonathan H.W., 2020. "Why should majority voting be unfair?," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 281-295.

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    More about this item

    Keywords

    Demand bargaining; Non-cooperative; Laboratory experiment; Social preferences; Reference dependence;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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