Fairness Norms in Ultimatum Exchanges
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Investigations of fairness in bargaining have been one of the major microeconomic research topics during the last two decades. Countless studies have been published, and various models to explain observed behavior developed (see, e.g., Camerer 2003 for an overview).
One extensive line of research investigates the relevance of reference points for individual behavior. Such a reference point might, for example, resemble a belief about the choice one should choose (compare Konow 2000 for a theory based on cognitive dissonance), or the default choice as in models with endowment effects. The literature on reference-dependent preferences can be traced back to the model of Tversky and Kahneman (1991). They base their model on Kahneman and Tversky’s (1979) prospect theory and shift the attention from the absolute outcome to the difference of an outcome to a given reference level (e.g., the status quo).
KeywordsSocial Norm Reference Price Reservation Price Subject Pool Ultimatum Game
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