Bargaining, Fairness and the Labor Allocation Problem
Abstract
Bilateral bargaining is used extensively in the assignment of Navy billets. This report is an experimental study of bilateral bargaining in a stylized setting. It examines the role of fairness in bilateral negotiations, and in the efficient allocation of resources. A total of 160 subjects participated in two separate experiments. The findings of the study are twofold. First, the strictly rational model aggregates the data better than two models of fairness, but fairness clearly plays a role in the actions of both parties in the bilateral negotiation. Second, fairness plays a greater role when there exists asymmetric information between the two parties in the negotiation. The practical implication of this stylized study for the assignment of Navy billets is that while detailers might expect fairness to play a small role when negotiating with sailors, ignoring fairness significantly increases the risk of bargaining failure. In a Naval context, the subsequent misallocation of resources is unfilled billets and low retention rates.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 2002
- Accession Number
- ADA414359
Entities
People
- Mark Vanboening
- Paul Pecorino
Organizations
- University of Alabama