Envy can promote more equal division in alternating-offer bargaining.

Köhler, Stefan

doi:10.1037/npe0000001

Cited by 13 publications

(9 citation statements)

References 27 publications

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“…That is, the seller's incentive increases whereas a self-interested buyer's incentive decreases the likelihood of observing the pooling equilibrium. For two bargainers with social preferences, Kohler [29,30] studied the impact of commonly known envy or guilt on the bargaining outcome in a model of open-ended alternating-offer bargaining. Even if both bargainers have similar social preferences, the bargaining outcome can differ from the division agreed by self-interested bargainers.…”

Section: Discussionmentioning

confidence: 99%

“…They argue that a distributional concern is necessary to explain the observed behavior and estimate significant linear inequality aversion preferences as introduced by Fehr and Schmidt [28] based on the experimental data. How guilt or envy affects either party's bargaining power and, thus, the outcome of open-ended alternating-offer bargaining is shown by Kohler [29,30]. Compassionate bargainers reach agreement in the first period.…”

Section: Related Literaturementioning

confidence: 99%

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Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Köhler

2012

Games

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Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both regularities coherently by modeling heterogeneous social preferences, either self-interest or envy, of one bargaining party as private information in a three period game of bargaining and preference screening and signaling

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Section: Discussionmentioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Köhler

2012

Games

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“…Puppe [2009, 2010] find that envy-freeness was a dominant factor in the allocations favored by subjects, but that it was a secondary criterion to Pareto optimality or inequality minimizing allocations. Kohler [2013] proposes an equilibrium strategy for repeated negotiation that incorporates fairness and envy concerns. In all of these papers, the studies were conducted in a controlled lab setting in which subjects' valuations over goods were imposed on the subjects, or the goods to be allocated were chosen by the experimenters themselves.…”

Section: Related Workmentioning

confidence: 99%

Which Is the Fairest (Rent Division) of Them All?

Gal

Mash

Procaccia

et al. 2016

Proceedings of the 2016 ACM Conference on Economics and Computation

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"Mirror mirror on the wall, who is the fairest of them all?" The Evil QueenWhat is a fair way to assign rooms to several housemates, and divide the rent between them? This is not just a theoretical question: many people have used the Spliddit website to obtain envy-free solutions to rent division instances. But envy freeness, in and of itself, is insufficient to guarantee outcomes that people view as intuitive and acceptable. We therefore focus on solutions that optimize a criterion of social justice, subject to the envy freeness constraint, in order to pinpoint the "fairest" solutions. We develop a general algorithmic framework that enables the computation of such solutions in polynomial time. We then study the relations between natural optimization objectives, and identify the maximin solution, which maximizes the minimum utility subject to envy freeness, as the most attractive. We demonstrate, in theory and using experiments on real data from Spliddit, that the maximin solution gives rise to significant gains in terms of our optimization objectives. Finally, a user study with Spliddit users as subjects demonstrates that people find the maximin solution to be significantly fairer than arbitrary envy-free solutions; this user study is unprecedented in that it asks people about their real-world rent division instances. Based on these results, the maximin solution has been deployed on Spliddit since April 2015.

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“…A paper that is highly relevant to my model is Kohler (2013), which introduces envy into the alternating offers framework. Section 2.4 of my paper contains a detailed comparison with Kohler's paper, in terms of concepts, results, and their interpretation.…”

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confidence: 99%

“…In Section 2 I set up the model and study equilibrium outcomes under (i) one-sided malice, (ii) two-sided malice, and (iii) an alternative "continuous" formulation of malice. Section 2.4 contains a discussion, in particular comparing malice with Kohler's (2013) paper on envy. Section 3 concludes.…”

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confidence: 99%

Malice in the Rubinstein bargaining game

Guha

2018

Mathematical Social Sciences

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This is the first paper to incorporate malice into the Rubinstein alternating offers bargaining game. Initially, I examine outcomes with one-sided malice, allowing one of the bargaining players to be malicious in the sense that he obtains a positive payoff in every period in which the other player does not obtain any piece of the pie. This "malice payoff" is independent of whether the malicious player himself obtains the pie or not. I identify a unique SPNE of the bargaining game, and find that malice confers bargaining advantage; if the respondent is malicious, this can in some cases completely erode and even reverse first mover advantage. I then examine twosided malice. I find that the proposer's share when both players are malicious may either increase or decrease relative to the traditional Rubinstein shares. Even with two-sided malice, the proposer may end up with a lower share than the respondent. The results remain qualitatively similar under an alternative "continuous" formulation of malice. I contrast them with the case of envious preferences.

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Envy can promote more equal division in alternating-offer bargaining.

Cited by 13 publications

References 27 publications

Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Which Is the Fairest (Rent Division) of Them All?

Malice in the Rubinstein bargaining game

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