SFB 303 Discussion Paper No. B-356e

Author: Hennig-Schmidt, Heike
Title: Equity, Fairness and Prominence, Determinants for the Behavior of Player Groups in a Bargaining Video Experiment
Abstract: We report on a two-person bargaining experiment, where both players are represented by groups of three persons each. Both groups negotiate on the division of a given amount. If they do not come to an agreement, they receive a guaranteed payoff which is higher for one group than for the other. The discussions within the groups were recorded on video and transcribed into text protocols. From these protocols the behavior of the player groups has been analysed. We found that all groups very early in the bargaining process formulate aspiration levels. These aspiration levels are formed and adapted according to two very simple behavioral principles: 1. the equity principle (Selten 1978, 1987) and 2. the prominence principle (Schelling 1960, Albers and Albers 1983) and combinations of both
Keywords: Experimental economics, bargaining experiments, video experiments, aspiration level, adaptation of aspiration, equity principle, prominence
JEL-Classification-Number: C7, C71, C79
Creation-Date: January 1996, revised version September 1996
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