article

What Price Fairness? A Bargaining Study

Authors:

Xiao-Ping ChenAuthors Info & Claims

Management Science, Volume 45, Issue 6

Pages 804 - 823

Published: 01 June 1999 Publication History

Abstract

Our study concerns bargaining behavior in situations where one party is in a stronger position than the other. We investigate both the tradeoff the favored party makes between pursuing his strategic advantage and giving weight to other players' concern for fairness, and the tradeoff the disadvantaged player makes between pursuing a fair outcome from a disadvantaged position and the cost of that pursuit. In particular, we hypothesize that the degree to which strategically strong players attempt to exploit their strategic advantage depends on their potential costs for doing so. Similarly, the degree to which weak players persist in seeking "fairness" is also a function of how much it potentially costs them to do so.

Students negotiated in pairs over the division of $HK50 using a finite horizon, fixed-cost per rejection alternating offer rule. Each pair consisted of a high-cost and a low-cost bargainer. In accordance with the hypothesis, the willingness of the high-cost bargainers to demand fairness and to persist in their demands was a function of how much it cost them to do so, and the degree to which the low-cost bargainers attempted to exploit their strategic advantage depended on their own cost of rejection. We conclude that "fairness" has a price such that the higher its price, the lower the "demand" for it. This suggests that demands for fairness are subject to cost-benefit evaluation, are in this sense deliberate, and are well thought out.

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Surma J(2016)Social exchange in online social networks. The reciprocity phenomenon on FacebookComputer Communications10.1016/j.comcom.2015.06.01773:PB(342-346)Online publication date: 1-Jan-2016
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Index Terms

What Price Fairness? A Bargaining Study
1. Applied computing
  1. Enterprise computing
    1. Business process management
2. Computing methodologies
  1. Modeling and simulation
    1. Model development and analysis
      1. Model verification and validation
    2. Simulation evaluation

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Published In

cover image Management Science

Management Science Volume 45, Issue 6

June 1999

134 pages

ISSN:0025-1909

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Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 June 1999

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Cited By

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https://dl.acm.org/doi/10.1287/mksc.2020.1244
Brandts JCooper DFatas EQi S(2016)Stand by Me-Experiments on Help and Commitment in Coordination GamesManagement Science10.1287/mnsc.2015.226962:10(2916-2936)Online publication date: 1-Oct-2016
https://dl.acm.org/doi/10.1287/mnsc.2015.2269
Surma J(2016)Social exchange in online social networks. The reciprocity phenomenon on FacebookComputer Communications10.1016/j.comcom.2015.06.01773:PB(342-346)Online publication date: 1-Jan-2016
https://dl.acm.org/doi/10.1016/j.comcom.2015.06.017
Gettinger JKoeszegi SSchoop M(2012)Shall we dance? - The effect of information presentations on negotiation processes and outcomesDecision Support Systems10.1016/j.dss.2012.01.00153:1(161-174)Online publication date: 1-Apr-2012
https://dl.acm.org/doi/10.1016/j.dss.2012.01.001
Krishna AÜnver M(2008)Research Note---Improving the Efficiency of Course Bidding at Business SchoolsMarketing Science10.5555/2805046.280504827:2(262-282)Online publication date: 1-Mar-2008
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Shugan S(2005)Marketing and Designing Transaction GamesMarketing Science10.5555/2882626.288262724:4(525-530)Online publication date: 1-Nov-2005
https://dl.acm.org/doi/10.5555/2882626.2882627

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