Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations

Abstract

Theoretical research on claims problems has concentrated on normative properties andaxiomatizations of solution concepts. We complement these analyses by empirical evidenceon the predictability of three classical solution concepts in a bankruptcy problem. Weexamine both people's impartial normative evaluations as well as their actual negotiationbehavior in a bargaining with claims environment. We measure people's judgments on thenormative attractiveness of solution concepts with the help of a survey and also observeactual agreements in a bargaining experiment with real money at stake. We find that theproportional solution is the normatively most attractive rule, whereas actual negotiationagreements are closest to the 'constrained equal award' solution.

Keywords: laboratory experiment, bankruptcy problems with claims, proportional rule, equal-awards rule, equallosses rule, fairness, vignette

JEL Classification: D63, C78, C92