Fairness Preferences in Distributive Bargaining

In a bargaining situation, the willingness to reveal a preference for fairness requires, almost by definition, that bargainers be willing to make material sacrifices, and material pursuits may thus override concerns for fairness. This paper presents a bargaining institution that allows for partial disagreement. It will be demonstrated that such a bargaining institution enables a bargainer to reconcile a potential conflict between a preference for fairness and material self-interest. Our approach takes advantage of (qualitative) preferences for fairness to promote economic efficiency.