American Economic Review Vol. 99 No. 2 2009
Over My Dead Body: Bargaining and the Price of Dignity
Abstract
Concerns of pride, dignity, and the desire to keep hope about future options often lead individuals and groups to walk away from rea sonable offers, try to shift blame for failure onto others or take refuge in political utopias. Costly impasses and conflicts result, such as trials, divorces, strikes, the scapegoating of minorities for economic hardships, and wars. A key and puzzling aspect of these processes is the role played by wishful rationalizations and delusions, as attested by field observers (e.g., Truman F. Bewley (1999) in the context of labor relations; Kevin Woods, James Lacey, and Williamson Murray (2006) in that of war), as well as controlled experiments. Leigh Thompson and George Loewenstein (1992) and Linda C. Babcock et al. (1995) thus demonstrate how subjects in bargaining situations with common knowledge spontaneously generate, through self-serving processing and recall of the same evidence, divergent beliefs about the fairness of their cause and wishful predictions of outcomes, and how these are associated to costly delays and disagreements.
- DOI
- 10.1257/aer.99.2.459
- Volume
- 99
- Issue
- 2
- Pages
- 459-465
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref