Equality vs. efficiency in bargaining with indivisibility
Waseda University - Japan
Equality and efficiency are prominent motivations for deals in cooperative bargaining. We design an unstructured bargaining experiment where resources are indivisible and participants could only accept payoffs as multiples of assigned unit numbers. The main goal of the research is to verify whether equality or efficiency would prevail in such a situation. We further employ Murphy et al.’s social value orientation (SVO) measures (2011) to identify the link between bargaining behaviors and other-regarding preferences. Preliminary data showed that many participants still agreed to split payoffs equally, even when it was Pareto inefficient. Disadvantaged subjects (DS), who had less flexibility in receiving resources, were more influential in shaping the bargaining solution. Individualistic DS seemed to favor equal division over the Nash Bargaining Solution, while the reverse seemed to apply to prosocial DS, who tended to award more resources to their opponents.
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