Explaining Bargaining Impasse: The Role of Self-Serving Biases

Babcock, Linda; Loewenstein, George

doi:10.1257/jep.11.1.109

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Journal of Economic Perspectives: Vol. 11 No. 1 (Winter 1997)

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Explaining Bargaining Impasse: The Role of Self-Serving Biases

Article Citation

Babcock, Linda, and George Loewenstein. 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases." Journal of Economic Perspectives, 11(1): 109-126.

DOI: 10.1257/jep.11.1.109

Abstract

The authors review studies conducted by themselves and coauthors that document a 'self-serving' bias in judgments of fairness and demonstrate that the bias is an important cause of impasse in negotiations. They discuss experimental evidence showing that (1) the bias causes impasse; (2) it is possible to reduce impasses by debiasing bargainers; and (3) the bias results from selective evaluation of information. The authors also review results from a field study of negotiations between teachers' unions and school boards in Pennsylvania that both document the fairness bias in a naturalistic setting and demonstrates its impact on strikes.

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Authors

Babcock, Linda (Heinz School of Public Policy & Management, Carnegie Mellon)
Loewenstein, George (Carnegie Mellon U)

JEL Classifications

D74: Conflict; Conflict Resolution; Alliances
J52: Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining

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