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Maus, Patrick (2024) Essays on social reference points and the compromise effect in bargaining. PhD thesis, University of Nottingham.

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Abstract

This thesis contributes to the investigation of reference points, the behavioral effects of social comparisons and context effects in bargaining games. The work consists of three experimental studies which will be summarized below.

In the first study, we report a laboratory experiment testing whether social reference points impact effort provision. Subjects are randomly assigned the role of worker or peer and the worker observes the peer’s earnings before participating in a real-effort task. Between treatments, we

exogenously manipulate peer earnings. We find that the workers recall the earnings of their peer and are less satisfied with their own earnings when their peer earns more. Despite this, we do not observe a treatment effect in effort choices. Thus, although our subjects appear to care about income differentials, this does not translate to a change in behavior in our incentivized environment. We relate our results to recent studies of inequality and effort provision.

In the second study, we use a very similar design to test whether social reference points impact donation decisions. Subjects are randomly assigned the role of decision-maker or peer and the decision-maker observes the peer’s earnings before making a real donation decision. Between treatments, we exogenously manipulate peer earnings. We derive our predictions using a model where the optimal donation decision is influenced by social comparison concerns. We find that subjects donate substantially more when peer earnings are relatively low. Using additional treatments, we show that our treatment effects can not be explained by confounding factors such as feelings of disappointment, anchoring, and experimenter demand effects.

In the third study, we experimentally investigate compromise effects, namely a tendency for bargainers to agree to an intermediate outcome, by comparing Ultimatum Games with varying sets of feasible offers. We find that when an extremely unfair offer is added to the set of feasible offers i) Responders are more likely to accept a somewhat unfair offer and ii) Proposers tend to switch from a fair offer to a somewhat unfair offer but only if the Fair contract is not exactly equal. To test for the role of reciprocal concerns in our findings, we additionally conducted a set of Dictator and Random Proposal Games. Together, they suggest that the change in responder behavior is not purely driven by reciprocity, and the change in proposer behavior is not driven by a change in proposer preferences over outcomes.

Item Type:	Thesis (University of Nottingham only) (PhD)
Supervisors:	Montero, Maria Sefton, Martin
Keywords:	social comparisons, reference-dependent preferences, inequity aversion, relative income concerns, compromise effect, bargaining
Subjects:	H Social sciences > HB Economic theory
Faculties/Schools:	UK Campuses > Faculty of Social Sciences, Law and Education > School of Economics
Item ID:	78751
Depositing User:	Maus, Patrick
Date Deposited:	12 Dec 2024 04:40
Last Modified:	12 Dec 2024 04:40
URI:	https://eprints.nottingham.ac.uk/id/eprint/78751

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