Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92387
Authors: 
Herz, Holger
Taubinsky, Dmitry
Year of Publication: 
2013
Series/Report no.: 
Working Paper Series, University of Zurich, Department of Economics 128
Abstract: 
People's desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model's predictions. We find that previous exposure to competitive pressure substantially and persistently reduces subjects' fairness concerns, making them more likely to accept transactions in which they receive a low share of the surplus. Consistent with our theory, we also find that past experience has little effect on subjects' inclinations to treat others unfairly.
Subjects: 
Social Preferences
Reference Points
Fairness
Bargaining
JEL: 
C78
D01
D03
C91
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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