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Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

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  • Stefan Kohler

    (Institute for Social Medicine, Epidemiology and Health Economics, Charité University Medical Center, Luisenstrae 57, 10117 Berlin, Germany)

Abstract

Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both regularities coherently by modeling heterogeneous social preferences, either self-interest or envy, of one bargaining party as private information in a three period game of bargaining and preference screening and signaling.

Suggested Citation

  • Stefan Kohler, 2012. "Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining," Games, MDPI, vol. 3(3), pages 1-19, September.
    • Handle: RePEc:gam:jgames:v:3:y:2012:i:3:p:119-137:d:20059
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    References listed on IDEAS

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    Cited by:

    1. Stefan Kohler & Karl H. Schlag, 2019. "Inequality Aversion Causes Equal Or Unequal Division In Alternating‐Offer Bargaining," Bulletin of Economic Research, Wiley Blackwell, vol. 71(1), pages 47-57, January.
    2. Ozan Aksoy & Jeroen Weesie, 2013. "Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences," Games, MDPI, vol. 4(1), pages 1-23, February.
    3. Kohler, Stefan, 2012. "Envy can promote more equal division in alternating-offer bargaining," MPRA Paper 40761, University Library of Munich, Germany.

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