Is fairness used instrumentally? Evidence from sequential bargaining

The equal split is a widely observed outcome in experimental studies of two-person bargaining. Until now only joint hypotheses that combine assumptions about preferences with equilibrium concepts have been used to explain the origin of the equal split. This paper reports an experiment that controls for the preferences of subjects and therefore sheds light on the social orientation of those proposers who make fair offers. The data suggest that fair offers are due to players with fair social orientations, but egoists use fairness instrumentally by increasing offers when they anticipate low offers will be rejected. When responding to offers, rather than principled fairmen defending the equal split, the data suggest that competitive individuals are responsible for most rejections.

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