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Market experience is a reference point in judgments of fairness


Herz, Holger Andreas; Taubinsky, Dmitry (2013). Market experience is a reference point in judgments of fairness. Working paper series / Department of Economics 128, University of Zurich.

Abstract

People's desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model's predictions. We find that previous exposure to competitive pressure substantially and persistently reduces subjects' fairness concerns, making them more likely to accept low offers. Consistent with our theory, we also find that past experience has little effect on subjects' inclinations to treat others unfairly.

Abstract

People's desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model's predictions. We find that previous exposure to competitive pressure substantially and persistently reduces subjects' fairness concerns, making them more likely to accept low offers. Consistent with our theory, we also find that past experience has little effect on subjects' inclinations to treat others unfairly.

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7 citations in Microsoft Academic

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C78, C91, D01, D03
Uncontrolled Keywords:Social preferences, reference points, fairness, bargaining, Fairness, Präferenz, Gerechtigkeitsgefühl, Entscheidungsverhalten, Wettbewerb, Marktform
Language:English
Date:July 2013
Deposited On:24 Jul 2013 08:31
Last Modified:24 Jul 2018 14:45
Series Name:Working paper series / Department of Economics
Number of Pages:44
ISSN:1664-7041
OA Status:Green
Official URL:http://www.econ.uzh.ch/static/wp/econwp128.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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