October 2004

IZA DP No. 1375: Dividing Justly in Bargaining Problems with Claims: Normative Judgments and Actual Negotiations

published in: Social Choice and Welfare, 2006, 27, 571-594; doi:0.1007/s00355-006-0141-z

Theoretical research on claims problems has concentrated on normative properties and axiomatizations of solution concepts. We complement these analyses by empirical evidence on the predictability of three classical solution concepts in a bankruptcy problem. We examine both people's impartial normative evaluations as well as their actual negotiation behavior in a bargaining with claims environment. We measure people's judgments on the normative attractiveness of solution concepts with the help of a survey and also observe actual agreements in a bargaining experiment with real money at stake. We find that the proportional solution is the normatively most attractive rule, whereas actual negotiation agreements are closest to the 'constrained equal award' solution.