Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78372
Authors: 
Hennig-Schmidt, Heike
Year of Publication: 
2000
Series/Report no.: 
Bonn Econ Discussion Papers 14/2001
Abstract: 
Experimentally observed deviations of behavior from game theoretic predictions suggest that fairness does influence decision making. Fairness in the sense of equality has become an essential element of economic models aiming at explaining actual behavior (cf. Fehr and Schmidt, 1999; Bolton and Ockenfels, 2000). In this paper I will argue that equality is not the only fairness norm to be taken into account. More equity norms than equality exist, including inequality of payoffs. Since inequitable payoff allocations are advantageous for the one player and disadvantageous for the other, subjects may fall prey to a self-serving bias in their fairness perceptions. Opponents may adhere to different conceptions of fairness making agreement impossible. Using the video method (Hennig-Schmidt, 1999) I further show in a bargaining experiment that behavior is goal-oriented. Fairness criteria based on equity norms guide the formation and adaptation of aspiration levels.
Subjects: 
experimental economics
video experiments
fairness
equity principle
self-serving bias
aspiration levels
decision making
JEL: 
C7
C90
C92
Document Type: 
Working Paper

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