Advertisement

Social Justice Research

, Volume 16, Issue 3, pp 241–262 | Cite as

Fairness in Bargaining

  • Madan M. PillutlaEmail author
  • J. Keith Murnighan
Article

Abstract

This paper uses historical and contemporary philosophical discussions of fairness to present a structural approach to the definition of fairness. After establishing a set of standards (not a specific definition), we assess the impact of fairness in negotiations and bargaining. Our analysis concludes that truly fair behavior is absent in bargaining and negotiations. Instead, behaviors that have been called just can also be characterized as self-interested. Our review suggests that the term fairness has been used rather loosely, as a convenient label or as a more palatable alternative to self-interested explanations for an individual's choices. For reasons of both parsimony and accuracy, we recommend that the self-interest of the actors be carefully considered before calling their bargaining behavior fair.

fairness self-interest ultimate negotiations 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Adams, J. (1963). Toward an understanding of inequity. J. Abnorm. Soc. Psychol. 67: 422-436.Google Scholar
  2. Adams, J. (1965). Inequity in social exchange. In Berkowitz, L. (ed.), Advances in Experimental Social Psychology, Vol. 2, Academic Press, New York, pp. 267-299.Google Scholar
  3. Adelson, H. L. (1995). The origins of a concept of social justice. In Irani, K. D., and Silver, M. (eds.), Social Justice in the Ancient World, Greenwood, NY, pp. 25-40.Google Scholar
  4. Allison, S. T., and Messick D. M. (1990). Social decision heuristics and the use of shared resources. J. Behav. Decis. Making 3: 195-204.Google Scholar
  5. Aristotle (1972). Nicomachean ethics. Book V. In Frost, S. E. (ed.), Masterworks of Philosophy, Vol. 1, McGraw-Hill, New York, pp. 135-140.Google Scholar
  6. Batson, C. D. (1991). The Altruism Question, Erlbaum, Hillsdale, NJ.Google Scholar
  7. Bazerman, M. (1995). Negotiation. In Nicholson, N. (ed.), Encyclopedic Dictionary of Organizational Behavior, Blackwell, Cambridge, MA, pp. 342-345.Google Scholar
  8. Bettenhausen, K., and Murnighan, J. K. (1991). The development of an intragroup norm and the effects of interpersonal and structural challenges. Adm. Sci. Q. 36: 20-35.Google Scholar
  9. Bies, R. J., and Moag, J. S. (1986). Interactional justice: Communication criteria of fairness. In Lewicki, R. J. H., Sheppard, B. H., and Bazerman, M. H. (eds.), Research on Negotiations in Organizations, Vol. 1, JAI Press, Greenwich, CT, pp. 43-55.Google Scholar
  10. Bolton, G. E., Katok, E., and Zwick, R. (1998). Dictator game giving: Rules of fairness versus acts of kindness. Int. J. Game Theory 27: 269-299.Google Scholar
  11. Camerer, C., and Lowenstein, G. (1993). Information, fairness, and efficiency in bargaining. In Mellers, B. A., and Baron, J. (eds.), Psychological Perspectives on Justice: Theory and Application, Cambridge University Press, Cambridge, MA, pp. 155-179.Google Scholar
  12. Cosmides, L. (1989). The logic of social exchange: Has natural selection shaped how humans reason? Studies with the Wason selection task. Cognition 31: 187-276.Google Scholar
  13. Croson, R. (1996). Information in ultimatum games: An experimental study. J. Econ. Behav. Organ. 30: 197-212.Google Scholar
  14. Deutsch, M. (1985). Distributive Justice: A Social—Psychological Perspective, Yale University Press, New Haven, CT.Google Scholar
  15. Elster, J. (1992). Local Justice: How Institutions Allocate Scarce Goods and Necessary Burdens, Russel Sage Foundation, New York.Google Scholar
  16. Falk, A., Fehr, E., and Fischbacher, U. (2003). On the nature of fair behavior. Econ. Inq. 41: 20-26.Google Scholar
  17. Farrell, J., and Gibbons, R. (1989). Cheap talk with two audiences. Am. Econ. Rev. 79: 1214-1223.Google Scholar
  18. Festinger, L. (1954). A theory of social comparison processes. Hum. Relat. 7: 117-140.Google Scholar
  19. Festinger, L. (1957). A Theory of Cognitive Dissonance, Row Peterson, Evanston, IL.Google Scholar
  20. Fisher, R., and Ury, W. (1981). Getting to Yes, Houghton-Mifflin, Boston.Google Scholar
  21. Forsythe, B., Horowitz, J., Savin, N., and Sefton, M. (1994). Fairness in simple bargaining experiments. Games Econ. Behav. 6: 347-369.Google Scholar
  22. Greenberg, J. (1990). Looking fair vs. being fair: Managing impressions of organizational justice. In Staw, B. M., and Cummings, L. L (eds.), Research in Organizational Behavior, Vol. 12, JAI Press, Greenwich, CT, pp. 111-157.Google Scholar
  23. Güth, W., Huck, S., and Ockenfels, P. (1996). Two-level ultimatum bargaining with incomplete information: An experimental study. Econ. J. 106: 593-604.Google Scholar
  24. Güth, W., Schmittberger, R., and Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. J. Econ. Behav. Organ. 3: 367-388.Google Scholar
  25. Güth, W., and van Damme, E. (1998). Information, strategic behaviour and fairness in ultimatum bargaining. J. Math. Psychol. 42: 227-247.Google Scholar
  26. Harrison, G., and McCabe, K. (1992). Expectations and fairness in a simple bargaining experiment. Paper Presented at The Public Choice Society Meetings, New Orleans LA.Google Scholar
  27. Hoffman, E., McCabe, K., Shachat, K., and Smith, V. (1994). Preferences, property rights and anonymity in bargaining games. Games. Econ. Behav. 7: 346-380.Google Scholar
  28. Homans, G. (1961). Social Behaviour, Its Elementary Forms, Harcourt, Brace and World, New York.Google Scholar
  29. Homans, G. (1974). Social Behaviour, Its Elementary Forms, Rev. edn, Harcourt, Brace and World, New York.Google Scholar
  30. Hume, D. (1775/1975). An inquiry concerning the principles of morals. In Selby-Bigge, L. A. (ed.), Inquiries Concerning Human Understanding and Concerning the Principles of Morals, Claredon Press, Oxford.Google Scholar
  31. Irani, K.D. (1995). The idea of social justice in the ancient world. In Irani, K. D., and Silver, M. (eds.), Social Justice in the Ancient World, Greenwood, NY, pp. 3-8.Google Scholar
  32. Kahneman, D., Knetsch, J., and Thaler, R. (1986). Fairness and the assumptions of economics. J. Bus. 59: S285-S300.Google Scholar
  33. Kant, I., (1785/1981). In Ellington, J. W. (Trans.), Grounding for the Metaphysics of Morals, Hackett, Indianapolis IN.Google Scholar
  34. Kelley, H. H., and Stahelski, A. J. (1970). The social interaction basis of cooperators and competitors beliefs about others. J. Pers. Soc. Psychol. 16: 66-91.Google Scholar
  35. Komorita, S. S., and Chertkoff, J. M. (1973). A bargaining theory of coalition formation. Psychol. Rev. 80: 149-162.Google Scholar
  36. Kramer, R., Thompson, L., and Valley, K. (1996). The bittersweet feeling of success: An examination of social perception in negotiation. J. Exp. Soc. Psychol. 31: 467-492.Google Scholar
  37. Kravitz, D., and Gunto, S. (1992). Decisions and recipients in ultimatum bargaining games. J. Soc. econ. 21: 65-84.Google Scholar
  38. Leventhal, G. S., and Anderson, D. (1970). Self-interest and the maintenance of equity. J. Pers. Soc. Psychol. 15: 57-62.Google Scholar
  39. Lind, A., Kray, L., and Thompson, L. (1998). The social construction of injustice: Fairness judgments in response to own and others' unfair treatment by authorities. Organ. Behav. Hum. Decis. Processes 75: 1-22.Google Scholar
  40. Messick, D. M. (1993). Equality as a decision heuristic. In Mellers, B. A., and Baron, J. (eds.), Psychological Perspectives on Justice: Theory and Applications, Cambridge University Press, Cambridge, MA, pp. 11-31.Google Scholar
  41. Messick, D., and Sentis, K. (1979). Fairness and preference. J. Exp. Soc. Psychol. 15: 418-434.Google Scholar
  42. Messick, D., and Sentis, K. (1983). Fairness, preference, and fairness biases. In Messick, D. M., and Cook, K. S. (eds.), Equity Theory: Psychological and Sociological Perspectives, Praeger, New York, pp. 61-94.Google Scholar
  43. Mill, J. S. (1987). On the connection between justice and utility. In Ryan, A. (ed.), Justice, Oxford University Press, Oxford, pp. 51-72Google Scholar
  44. Mowday, R. (1983). Equity theory predictions of behavior in organizations. In Steers, R., and Porter, L. (eds.), Motivation and Work Behavior, 3rd edn, McGraw-Hill, New York, pp. 91-113.Google Scholar
  45. Murnighan, J. K. (1991). The Dynamics of Bargaining Games, Prentice-Hall, Englewood Cliffs, NJ.Google Scholar
  46. Murnighan, J. K., and Pillutla, M. M. (1995). Fairness versus self-interst: Asymmetric moral imperatives in ultimatum bargaining. In Kramer, R. M., & Messick, D. M. (eds.), Negotiation as a Social Process, Sage, Thousand Oaks, CA.Google Scholar
  47. Murnighan, J. K., and Saxon, M S. (1998). Ultimatum bargaining by children and adults. J. Econ. Psychol. 19: 415-445.Google Scholar
  48. Myerson, R. (1994). Game Theory, Harvard University Press, Cambridge, MA.Google Scholar
  49. Pillutla, M. M. (1995). Using Fairness Instrumentally Versus Being Treated Fairly: A Structural Resolution, Unpublished doctoral dissertation, University of British Columbia.Google Scholar
  50. Pillutla, M. M., and Murnighan, J. K. (1995). Being fair versus appearing fair: Strategic behavior in ultimatum bargaining. Acad. Manage. J. 38: 1408-1426.Google Scholar
  51. Pillutla, M. M., and Murnighan, J. K. (1996). Unfairness, anger, and spite: Emotional rejections of ultimatum offers. Orga. Behav. Hum. Decis. Processes 68: 208-224.Google Scholar
  52. Pillutla, M. M., and Murnighan, J. K. (2003). Power lost, power gained: Egocentric action and inconsistent perceptions, Mimeograph, Northwestern University (Under review).Google Scholar
  53. Plato (1993). The Republic. In Ryan, A (ed.), Justice, Oxford University Press, Oxford, pp. 18-33.Google Scholar
  54. Rawls, J. (1971). A Theory of Justice, Harvard University Press, Cambridge, MA.Google Scholar
  55. Ross, M., and Sicoly, F. (1979). Egocentric biases in availability and attribution. J. Pers. Soc. Psychol. 37: 322-337.Google Scholar
  56. Roth, A. (1995). Bargaining experiments. In Kagel, J., and Roth, A. (eds.), Handbook of Experimental Economics, Princeton University Press, Princeton, NJ, pp. 3-109.Google Scholar
  57. Ryan, A. (1993). Justice, Oxford University Press, Oxford.Google Scholar
  58. Selten, R. (1965). Spieltheoretische Behandlung eines Oligopol Models mit nachfragetragheit. Zeitschrift fur Gesamte Staatswissenschaft 121: 301-324.Google Scholar
  59. Shapiro, D. L. (1991). The effects of explanations on negative reactions to deceit. Adm. Sci. Q. 36: 614-630.Google Scholar
  60. Smith, A. (1790/1976). In Raphael, D. D., and Macfie, A. L. (eds.), The Theory of Moral Sentiments, Oxford University Press, Oxford.Google Scholar
  61. Straub, P., and Murnighan, J. K. (1991). Complete information and fairness in ultimatum bargaining, Public Choice Society meetings, New Orleans, LA.Google Scholar
  62. Straub, P., and Murnighan, J. K. (1995). An experimental investigation of ultimatums: Complete information, fairness, expectations, and lowest acceptable offers. J. Econ. Behav. Organ. 27: 345-364.Google Scholar
  63. Taylor, S. E., and Brown, J. D. (1988). Illusion and well-being: A social psychological perspective on mental health. Psychol. Bull. 103: 193-210.Google Scholar
  64. Thibaut, J., and Kelley, H. H. (1959). The Social Psychology of Groups, Wiley, New York.Google Scholar
  65. Thibaut, J., and Walker, L. (1975). Procedural Justice: A Psychological Analysis, Erlbaum, Hillsdale, NJ.Google Scholar
  66. Thompson, L., and Loewenstein, G. (1992). Egocentric interpretation of fairness and interpersonal conflict. Organ. Behav. Hum. Decis. Processes 51: 176-193.Google Scholar
  67. Tornblom, K. Y. (1977). Distributive justice: Typology and propositions. Hum. Rel. 30: 1-24.Google Scholar
  68. Tyler, T. R., and Dawes, R. M. (1993). Fairness in groups: Comparing the self-interest and social identity perspectives. In Mellers, B., and Baron, J. (eds.), Psychological Perspectives on Justice: Theory and Applications, Cambridge University Press, Cambridge, MA, pp. 87-109.Google Scholar
  69. Van Dijk, E., and Vermunt, R. (2000). Strategy and fairness in social decision making: Sometimes it pays to be powerless. J. Exp. Soc. Psychol. 36: 1-25.Google Scholar
  70. Walton, R., and McKersie, R. (1965). A Behavioral Theory of Labor Negotiations, McGraw-Hill, New York.Google Scholar

Copyright information

© Plenum Publishing Corporation 2003

Authors and Affiliations

  1. 1.London Business SchoolLondon
  2. 2.Kellogg School of ManagementNorthwestern UniversityEvanston

Personalised recommendations