Self-serving invocations of shared and asymmetric history in negotiations

Author(s)

Linda Dezsö, George Loewenstein

Abstract

The existence of an asymmetric history between bargaining partners can trigger self-serving beliefs about the fair settlement of a subsequent dispute, ultimately leading to bargaining impasse. In a two-stage bargaining experiment, we demonstrate that dyads who share a history that produced wealth asymmetries between them are less likely to settle in a subsequent negotiation than when the same wealth asymmetry stems from partners’ independent histories. When partners share an asymmetric history, the individual who previously lost out in the first stage believes that s/he deserves compensation in the second-stage, but the individual who prevailed in the first stage believes that compensation is not called for. These divergent, self-serving, views about a fair settlement – and the resulting irreconcilable demands – lead to bargaining impasse. We find, further, that unbiased spectators side with the losers in the first stage; they believe that it is fair for them to be compensated in the second stage. Indeed, this is true albeit to a lesser extent, even if the winner and loser had not directly interacted with one-another – i.e., if the history is not shared.

Organisation(s)

Vienna Center for Experimental Economics

External organisation(s)

Carnegie Mellon University

No. of pages

100

Publication date

2019

Austrian Fields of Science 2012

502047 Economic theory

Keywords

Portal url

https://ucrisportal.univie.ac.at/en/publications/53e714ee-db85-4522-8a21-7adb8056b996