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Biased Judgments of Fairness in Bargaining

Babcock, Linda and Loewenstein, George and Issacharoff, Samuel and Camerer, Colin F. (1995) Biased Judgments of Fairness in Bargaining. American Economic Review, 85 (5). pp. 1337-1343. ISSN 0002-8282.

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When court trials (or arbitration) are the mechanisms for resolving bargaining impasses, the costs and risks associated with third-party intervention should motivate settlement (Henry Farber and Harry Katz, 1979). However, empirical evidence suggests that impasses and inefficient settlements are common in the legal system and in contract negotiations. For example, one study of asbestos suits found that only 37 cents of every dollar spent by both sides end up in the plaintiffs' hands (James Kakalik et al., 1983).

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Camerer, Colin F.0000-0003-4049-1871
Additional Information:© 1995 American Economic Association. We are grateful for the comments of Jodi Gillis, Henry Hu, Douglas Laycock, Stewart Schwab, Charles Silver, Ruth Silverman, and the participants in the John M. Olin Conference on Dispute Settlement; we also thank Arlene Simon and Saul Straussman for research assistance. Loewenstein acknowledges the support of the Russell Sage Foundation; Issacharoff acknowledges the support of the Dean's Roundtable of the University of Texas School of Law and the Shell Oil Foundation; Camerer acknowledges the support of the National Science Foundation (grant no. SES-9023531)
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Russell Sage FoundationUNSPECIFIED
University of Texas School of LawUNSPECIFIED
Shell Oil FoundationUNSPECIFIED
Issue or Number:5
Record Number:CaltechAUTHORS:20110211-081556591
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Official Citation:Biased Judgments of Fairness in Bargaining Linda Babcock, George Loewenstein, Samuel Issacharoff and Colin Camerer The American Economic Review Vol. 85, No. 5 (Dec., 1995), pp. 1337-1343 Published by: American Economic Association Article Stable URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22124
Deposited By: Tony Diaz
Deposited On:11 Feb 2011 22:17
Last Modified:03 Oct 2019 02:34

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