Join us for the next ICES Experimental Economics Seminar of the semester, featuring Judd Kessler.
Professor Kessler, of the Wharton School of Business, will discuss his paper The Value of Information and the Role of Fairness in Bargaining. The talk will take place on Friday, April 12, from 4:00 to 5:30pm, in room 648 of the Truland Building, Arlington campus.
Research from the last 30 years suggests an important role of fairness in bargaining and market outcomes. One relatively consistent feature of this research, however, has been a focus on settings with complete information. Here we ask what role fairness plays in the myriad settings where parties are uniformed about the size of the pie. We provide experimental results from a laboratory bargaining game where neither, one, or both of the parties has information about the size of the pie. We find that the fairness concerns are significantly muted in settings when less information is available about the size of the pie, particularly when the seller, who responds to a take-it-or-leave-it offer from the buyer, is uniformed. This suggests that the ultimatum game — which has attracted significant attention and has highlighted the importance of fairness in bargaining — is a special case that is at the far end of the spectrum on the impact of fairness on bargaining outcomes. In addition, we find that the value of information for the parties is asymmetric and significantly more valuable to the seller than to the buyer.
Visit the Seminar schedule to learn more about upcoming speakers.