Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination
2016 (English)Report (Other academic)
What happens if a mechanism that aims at improving coordination treats some individuals unfairly? We investigate in a laboratory experiment whether procedural fairness concerns affect how well individuals are able to solve a coordination problem in a two-player Volunteer’s Dilemma. Subjects receive external action recommendations that can help them avoid miscoordination if followed by both players. One of the players receives a disadvantageous recommendation to volunteer while the other player receives a recommendation not to volunteer that gives her a payoff advantage if both players follow the recommendations they have received. We manipulate the fairness of the recommendation procedure by varying the probabilities of receiving a disadvantageous recommendation between players. We find that the recommendations improve overall efficiency regardless of their consequences for pay-off division. However, there are behavioral asymmetries depending on the recommendation received by a player: advantageous recommendations are followed less frequently than disadvantageous recommendations in case of actions that guarantee a low payoff. While there is no difference in acceptance of different recommendation procedures, beliefs about others’ actions are more pessimistic in the treatment with a procedure inducing unequal expected payoffs. Our data shows that beliefs about others’ behavior are correlated with one’s own behavior, however this is the case only when following recommendations is a strategy that involves payoff-uncertainty.
Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2016. , 40 p.
Linköping University Working Papers in Economics, 3
Coordination, Correlated equilibrium, Recommendations, Procedural fair- ness, Volunteer’s Dilemma, Experiment
IdentifiersURN: urn:nbn:se:liu:diva-125731OAI: oai:DiVA.org:liu-125731DiVA: diva2:908172