Behavioral Economics Commons^™

Fairness Doesn't Have To Be Egalitarian: Evidence From Bargaining Games, Kevin Wong

Theses and Dissertations

I develop a theoretical model and provide experimental evidence that social norms of fairness play a critical role in determining equilibrium outcomes in bargaining games.

Cooperation And Reciprocity In Anonymous Interactions: Other-Regarding Preferences And Quasi-Magical Thinking, Gregory Klevans

Theses and Dissertations

In economic experiments, players often demonstrate concerns for the relative payoffs between themselves and other subjects, in addition to their own payoffs. In addition, they appear to do their parts to achieve efficient outcomes, particularly when they are ignorant of the opponent's decision. I present a parsimonious model of other-regarding preferences and quasi-magical thinking that explains such behavior, and I apply it to four games: the prisoner's dilemma, the traveler's dilemma, the ultimatum game, and the trust game.

Mandatory Process, Matthew J.B. Lawrence

Indiana Law Journal

This Article suggests that people tend to undervalue their procedural rights—their proverbial “day in court”—until they are actually involved in a dispute. The Article argues that the inherent, outcome-independent value of participating in a dispute resolution process comes largely from its power to soothe a person’s grievance— their perception of unfairness and accompanying negative emotional reaction—win or lose. But a tendency to assume unchanging emotional states, known in behavioral economics as projection bias, can prevent people from anticipating that they might become aggrieved and from appreciating the grievance-soothing power of process. When this happens, people will waive their procedural rights …

Essays On The Optimality Of Delaying Quality Tests And The Reverse Hold-Up Problem, Natalia Gritsko

Doctoral Dissertations

This dissertation consists of two chapters that examine the optimality of delaying quality tests of new products and the effects of cancellation payments on the hold-up problem.

Chapter 1 analyzes the possibility of delaying quality testing of a new product when the market consists of an early adopter and a follower who receive some private information about the quality. In our social learning framework, delaying a test can lead to better informed decisions regarding conducting the test by the regulator because she, along with other market participants, gains more information about the product quality by observing early adopter's informative actions. …

Book Review, Matthew D. Adler

Faculty Scholarship

No abstract provided.

Justice And Fairness In The Dictator Game, Karl Schurter, Bart J. Wilson

Economics Faculty Articles and Research

This article uses a laboratory experiment to examine the question of whether justice and fairness are different motivational forces in the dictator game. "Justice" and "fairness" are often used interchangeably because their meanings and usages are so closely linked, despite their distinct connotations. Using four different treatments, our experimental design investigates the subtle differences between the two social concepts to explicate generosity in the dictator game. The results indicate that justice, not fairness, legitimizes property rights in the dictator game.

Incorporating Fairness Motives Into The Impulse Balance Equilibrium And Quantal Response Equilibrium Concepts: An Application To 2x2 Games, Alessandro Tavoni

Alessandro Tavoni

Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically; one such example is the impulse balance equilibrium (Selten, Chmura, 2008), which introduces a psychological reference point to which players compare the available payoff allocations. This paper is concerned with advancing two new, empirically sound, concepts: equity-driven impulse balance equilibrium (EIBE) and equity-driven quantal response equilibrium (EQRE): both introduce a distributive reference point to …

Profit Maximization Versus Disadvantageous Inequality: The Impact Of Self-Categorization, Stephen M. Garcia, Avishalom Tor, Max H. Bazerman, Dale T. Miller

Journal Articles

Choice behavior researchers (e.g., Bazerman, Loewenstein, & White, 1992) have found that individuals tend to choose a more lucrative but disadvantageously unequal payoff (e.g., self—$600/other—$800) over a less profitable but equal one (e.g., self—$500/other—$500); greater profit trumps interpersonal social comparison concerns in the choice setting. We suggest, however, that self-categorization (e.g., Hogg, 2000) can shift interpersonal social comparison concerns to the intergroup level and make trading disadvantageous inequality for greater profit more difficult. Studies 1–3 show that profit maximization diminishes when recipients belong to different social categories (e.g., genders, universities). Study 2 further implicates self-categorization, as selfcategorized individuals tend to …

Can Law And Economics Be Both Practical And Principled?, David A. Hoffman, Michael P. O'Shea

All Faculty Scholarship

This article describes important recent developments in normative law and economics, and the difficulties they create for the project of efficiency-based legal reform. After long proceeding without a well articulated moral justification for using economic decision procedures to choose legal rules, scholars have lately begun to devote serious attention to developing a philosophically attractive definition of well-being. At the same time, the empirical side of law and economics is also being enriched with an improved understanding of the complexities of individuals' decision-making behavior. That is where the problems begin. Scholars may have better, more plausible conceptions of well-being in hand, …