Arno Riedl :"Fairness and Coordination: The Role of Fairness Ideals in Coordination Failure and Success"

Abstract

We study the role of fairness ideals as focal points in coordination problems in homogeneous and heterogeneous groups. To this end, we first elicit normative beliefs concerning how a subsequent coordination game should be played. We find that in homogeneous groups, people share a unique belief of how to fairly play the game, while in heterogeneous groups, multiple well-defined but conflicting fairness ideals prevail.
In the coordination game, homogeneous groups are more likely than heterogeneous groups to successfully sustain coordination on efficient equilibria. Interestingly, in both types of groups, equilibria consistent with fairness ideals are more stable than other equilibria. Hence, the difference between groups occurs because heterogeneous groups find it much harder to reach such fair equilibria.
Our results underscore the effectiveness of shared fairness ideals in fostering efficient coordination and demonstrate that even under normative conflict, these can act as focal points.

Arno Riedl studied economics at the University of Vienna. He is professor of public economics at Maastricht University. In his research he uses an interdisciplinary approach to investigate human behavior.

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