17 October 2019
The Microeconomics Research Seminar welcomes Wulf Gaertner (Universität Osnabrück), who will present his work on
"Bargaining over Losses in Groups of Four: Findings from an Experimental Game".
Place: VMP 5, WiWi B2
Hour: 17:15 - 18:45
We are looking forward to seeing you there!
We conduct a lab-experimental study of bargaining over the distribution of monetary losses. Groups of four differently endowed participants must agree, as a group, on the contribution each participant will make to cover a financial loss imposed on the group. The study sheds light on burden sharing and what kind of loss allocation rules groups are willing to adopt. Given the experimental results that we gathered, two rules stand out as possible explananda, the constrained equal awards rule which has been characterized by Moulin (2000) and Herrero and Villar (2001) and a new theoretical model that will be characterized in this paper. Many proposals that participants made are close to a progressive rule which exempts the person with the lowest endowment from any losses and puts a larger burden on those with higher endowments. Such proposals can be explained by our model. However, there is also a large number of proposals which suggest that the two lowest groups in terms of initial endowments be exempted from any loss sharing. Such proposals are in conformity with the constrained equal awards rule.