Dividing justly in bargaining problems with claims: Normative judgments and actual negotiations

Theoretical research on claims problems has concentrated on normative properties and axiomatizations of solution concepts. We complement these analyses by empirical evidence on the predictability of three classical solution concepts in a bankruptcy problem. We examine both people’s impartial normative evaluations as well as their actual negotiation behavior in a bargaining with claims environment. We measure people’s judgments on the normative attractiveness of solution concepts with the help of a survey and also observe actual agreements in a bargaining experiment with real money at stake. We find that the proportional solution is the normatively most attractive rule, whereas actual negotiation agreements are closest to the ‘constrained equal-award’ solution

The effects of reference points on fairness judgments

Ankara : The Department of Economics İhsan Doğramacı Bilkent University, 2014.Thesis (Ph.D.) -- Bilkent University, 2014.Includes bibliographical references leaves 48-49.In this study, we empirically investigate the effects of reference points on fairness judgments with the help of the vignette technique. Specifically, we examine (i) whether reference points have influence on fairness judgments or not, (ii) if and how counter-intuitive reference points influence fairness judgments, and (iii) how the asymmetry of reference points shape fairness judgments. For that purpose, we use a within-subject design, in which participants are confronted with three versions of vignette: vignettes without reference point, vignettes with salient reference point, and vignettes with counter-intuitive reference point. Consequently, our findings suggest that (i) the reference points significantly influence fairness judgments, (ii) introducing counter-intuitive reference points moderate the salience of reference points, and (iii) the asymmetry of salient reference points has a concave relationship with fairness judgments, while the asymmetry of counter-intuitive reference points does not affect fairness judgments.Akar, BetulPh.D

Divorce Bargaining: The Limits on Private Ordering

In an article published in the Yale Law Journal, I suggested an alternative perspective for family law scholars concerned with divorce. It emphasized negotiation, not adjudication; private ordering, not regulation. This change in emphasis seemed timely, if not overdue. Available evidence has long shown that the overwhelming majority of divorcing couples resolve the distributional questions concerning marital property, alimony, child support, and custody without bringing any contested issue to court for adjudication. Therefore, the primary impact of the legal system falls not on the small number of contested cases, but instead on the far greater number of divorcing couples outside the courtroom who bargain in the shadow of the law. Thus, my emphasis is on negotiation not adjudication

Preferences for Redistribution and Pensions: What Can We Learn from Experiments?

Redistribution is an inevitable feature of collective pension schemes. It is still largely an open question what people‘s preferences are regarding redistribution—both through pensions schemes as well as more generally. It would seem that economists have little to say about this question, as they routinely assume that people are predominantly selfish. Economic experiments have revealed, however, that most people do in fact have redistributional preferences that are not merely inspired by self-interest. This paper reviews this experimental evidence. For that purpose we distinguish between three fundamentally different types of situations. The first deals with distributional preferences behind a veil of ignorance. What type of income distribution do people prefer when they do not know whether they will end up in an advantaged or disadvantaged position? A main result here is that, contrary to what John Rawls suggested, people do not prefer the maximin rule, but rather favor a utilitarian justice concept appended with a safety net for the poorest. Another result is that people are willing to accept income inequalities—as long as these are due to choices for which people can be held accountable. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Experiments show that preferences for redistribution are strongly dependent on a person‘s own position. People in a relatively disadvantaged position want more redistribution than those in a relatively advantaged position, which shows that preferences for redistribution are clearly affected by self-interest. Still, even many of those in an advantaged position display a preference forredistribution. This holds, in particular, if inequality is due to chance rather than effort. There are also significant differences in preferences between the genders and between people with different political orientations. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. People are dependent upon the cooperation of others for the achievement of their (income) goals. Experiments show that behavioral factors such as trust and reciprocity play a crucial role, and they also indicate that these factors are strongly affected by the institutional setting. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved?public economics ;

Preferences for Redistribution and Pensions. What can we Learn from Experiments?

Redistribution is an inevitable feature of collective pension schemes. Nevertheless, it is still an open question what people’s preferences are regarding this form of redistribution. This paper reviews experimental evidence on preferences regarding redistribution and asks what this evidence tells us about preferences for redistribution through pension schemes. We distinguish between three fundamentally different types of situations. The first deals with distributional preferences behind a veil of ignorance. What type of income distribution do people prefer when they do not know whether they will end up in an advantaged or disadvantaged position? The evidence shows that, contrary to John Rawls' suggestion, people do not prefer the maximin rule, but rather favor a utilitarian justice concept appended with a safety net for the poorest. Furthermore, people are willing to accept income inequalities when they are due to choices for which people can be held responsible. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Here the evidence shows that preferences for redistribution are strongly dependent on a person’s own position. Disadvantaged people want more redistribution than those who are relatively advantaged, indicating that preferences for redistribution are biased by self-interest. Still, even many of those in an advantaged position display a preference for redistribution. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. Here experiments show that behavioral factors such as trust and reciprocity play a crucial role, and that these factors are strongly affected by the institutional setting. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions.redistribution, fairness, pension, insurance, experiment

On the influence of hard leverage in a soft leverage bargaining game: The importance of credible claims

What makes a bargaining proposal credible? We study how hard leverage (binding commitment) influences soft leverage (appealing to a focal point) in a rich-context bargaining game known to exhibit competing claims to focality. In three treatments, our experiment varies one bargainer's ability to commit, holding the soft leverage condition fixed. As in previous studies, we observe that opening offers are consistent with the available soft leverage. The influence of hard leverage is most evident in the concessionary stage. Hard and soft leverage interact to influence outcomes: Hard leverage advantages its holder, yet settlements largely stay between the two focal points. We posit that focal points induce mutual expectations of bargainer social preferences that, when combined with the Nash bargaining solution, imply the comparative statics concerning the settlements observed. A similarly modified version of the Zeuthen–Harsanyi model of the bargaining process, agrees with the comparative statics on opening offers and concessions. © 2016 Elsevier Inc

On the Adjudication of Conflicting Claims: An Experimental Study

This paper reports an experimental study on three well-known solutions for problems of adjudicating conflicting claims: the constrained equal awards, the proportional, and the constrained equal losses rules. We first let subjects play three games designed such that the unique equilibrium allocation coincides with the recommendation of one of these three rules. In addition, we let subjects play an additional game, that has the property that all (and only) strategy profiles in which players coordinate on the same rule constitute a strict Nash equilibrium. While in the first three games subjectsÕ play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device, especially when we frame the game as an hypothetical bankruptcy situation. We also administered a questionnaire to a different group of students, asking them to act as impartial arbitrators to solve (among others) the same problems played in the lab. Also in this case, respondents were sensitive to the framing of the questions, but the proportional rule was selected by the vast majority of respondents.Claims problems, Proportional rule, Experimental Economics