Market experience is a reference point in judgments of fairness

Date: 2013-07
By: Holger Herz
Dmitry Taubinsky
URL: http://d.repec.org/n?u=RePEc:zur:econwp:128&r=net
People’s desire for fair transactions can play an important role in negotiations, organizations, and markets. In this paper, we show that markets can also shape what people consider to be a fair transaction. We propose a simple and generally-applicable model of path-dependent fairness preferences, in which past experiences shape preferences, and we experimentally test the model’s predictions. We find that previous exposure to competitive pressure substantially and persistently reduces subjects’ fairness concerns, making them more likely to accept low offers. Consistent with our theory, we also find that past experience has little effect on subjects’ inclinations to treat others unfairly.
Keywords: Social preferences, reference points, fairness, bargaining
JEL: C78
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Fee Versus Royalty Policy in Licensing Through Bargaining: An Application of the Nash Bargaining Solution

Shin Kishimoto, Shigeo Muto (2012) “Fee Versus Royalty Policy in Licensing Through Bargaining: An Application of the Nash Bargaining Solution." Bulletin of Economic Research, Volume 64, Issue 2, pages 293–304. DOI: 10.1111/j.1467-8586.2010.00356.x. 147.46.167.195 [PDF]

==notes by yinung==

這是理論文章,證明 Royalty licensing 比 fixed fee licensing 來得好 for firms and social veiw.

裡頭有 licensing patents 的理論文獻

==引文==

理論證明 fixed 比 royalty 好 in Kamien and Tauman (1986)
…Despite the fact that a royalty is often observed, theoretical analyses including Kamien and Tauman (1986) showed that a
fixed fee was superior to a royalty for both the patent holder and consumers.

但 Kamien and Tauman (2002) and Wang (1998) 證明 royalty 比 fixed  好
…Kamien and Tauman (2002) extended the model of Wang (1998) to a Cournot oligopoly market, and showed that if the patent holder competed in the product market with a sufficiently large number of firms, then a royalty is superior to a fixed fee for
him/her.

談判方式: “take-it-or-leave-it“ (像 ultimatum game)
…These studies basically assumed a “take-it-or-leave-it” licensing manner; that is,  the patent holder first announces a level of a fixed fee (or a royalty), and then firms  decide whether or not to buy the patent. Analyses were done in terms of noncooperative game theory.

也有用合作賽局為理論架構來研究 for licensing the patent
…Tauman and Watanabe (2007) applied the Shapley value and showed that the patent holder’s profit in the Shapley value approximated his/her equilibrium profit in the noncooperative model of Kamien and Tauman (1986) as the number of firms became large. Watanabe and Muto (2008) characterized the upper bound and the lower bound of the patent holder’s profits in the bargaining set.

==original ABSTRACT==

In this paper, we consider a Cournot duopoly market in which the patent-holding firm negotiates with its rival firm about payments for licensing a cost-reducing innovation. Applying the Nash bargaining solution, we compare two licensing policies, a fixed fee and a royalty. Our results are as follows. Royalty licensing is better than fixed fee licensing for both firms if the innovation is not drastic. So, royalty licensing is always carried out. Moreover, though there exists a case in which consumers prefer fixed fee licensing, royalty licensing is always superior to fixed fee licensing from the social point of view.

==references==

Kamien, M.I., Tauman, Y. (1986). Fees Versus Royalties and the Private Value of a Patent. Quarterly Journal of Economics, 101, 471-491.

Kamien, M.I., Tauman, Y. (2002). Patent Licensing: The Inside Story. The Manchester School, 70, 7-15.

[6] Rubinstein, A. (1982). Perfect Equilibrium in a Bargaining Model. Econometrica,  50, 97-109.
[7] Sen, D. (2005). Fee Versus Royalty Reconsidered. Games and Economic Behavior, 53, 141-147.
[8] Sen, D., Tauman, Y. (2007). General Licencing Schemes for a Cost-reducing Innovation. Games and Economic Behavior, 59, 163-186.
[9] Sempere-Monerris, J.Jos´ e., Vannetelbosch, V.J. (2001). The Relevance of Bargaining for the Licensing of a Cost-reducing Innovation. Bulletin of Economic Research, 53, 101-115.
[10] Tauman, Y .,Watanabe, N. (2007). The Shapley value of a patent licensing game: the asymptotic equivalence to non-cooperative results. Economic Theory, 30, 135-149.
[11] Wang, X.H. (1998). Fee Versus Royalty Licensing in a Cournot Duopoly Model. Economics Letters, 60, 55-62.
[12] Watanabe, N.,Muto, S. (2007). Stable Profit Sharing in Patent Licensing: General Bargaining Outcomes. Int. Journal of Game Theory, forthcoming.

Ultimatum bargaining behavior: A survey and comparison of experimental results

Werner Güth, and Reinhard Tietz (1990) “Ultimatum bargaining behavior:: A survey and comparison of experimental results." Journal of Economic Psychology, Volume 11, Issue 3, September 1990, Pages 417–449. DOI: http://dx.doi.org/10.1016/0167-4870(90)90021-Z. (PDF from EconPaper)

==notes by yinung==

==original Abstract==

In an ultimatum bargaining game players 1 and 2 can distribute a positive amount of money in the following way: first, player 1 determines his demand which player 2 can then either accept or induce conflict, i.e. player 2 faces the ultimatum either to accept player 1’s proposal or to have no agreement at all. Experimentally observed ultimatum bargaining decisions with amounts ranging from 0.50 to 100 German marks are statistically analysed. The demands of player 1 are compared with the acceptance behavior of player 2 with the help of consistency tests in which a subject has to decide in the position of both players. Finally, we consider ultimatum bargaining games with more than just one round where, except for the final round, nonacceptance does not cause conflict but another round of ultimatum bargaining for a smaller cake.

New Zealand Economic Papers. Special Issue: Laboratory Experiments in Economics, Finance and Political Science

New Zealand Economic Papers. Special Issue: Laboratory Experiments in Economics, Finance and Political Science, 43(2),87-225.

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Charles Noussair; Maroš Servátka; Steven Tucker
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