THE IMPACT OF ENTITLEMENTS AND EQUITY ON COOPERATIVE BARGAINING: AN EXPERIMENT

In some bargaining situations—for example, collaborative policy making and compulsory arbitration—a third party imposes a backstop position that differs from the status quo. Axiomatic models of cooperative bargaining presume that the status quo in such cases will have no effect on the negotiated outcome, especially if it is Pareto inferior to the backstop. Recent literatures on equity and entitlement, however, suggest that the status quo may establish a focal point that acts as an “anchor” in current negotiations, affecting any ultimate agreement. In a two‐party, two‐attribute experiment, in which subjects jointly select from up to 200 options, we find evidence (1) that the status quo matters, perhaps because of “entitlement effects” and (2) that parties prefer egalitarian outcomes to the Nash bargain. (JEL C92, D74, H44, Q58)     

PERCEIVED IMPACT OF DEFAMATION: AN EXPERIMENT ON THIRD-PERSON EFFECTS

This paper explores the intersection of libel law and communicationtheory that occurs when libel juries assess the effect of adefamatory communication on others. The third-person hypothesissuggests that people often assume others will be more affectedby potentially persuasive communications than they are themselves.An experiment was conducted in which students were exposed toa variety of defamatory newspaper articles. The results confirmedseveral predictions. First, readers estimated that others wouldbe more affected by defamatory messages than the readers themselveswould be. Second, this effect was magnified as the "others"became progressively more distant from these readers. Third,when the defamation was attributed to a negatively biased sourcethe effect was also accentuated: readers themselves discountedthe message, while assuming others would be even more influenced.It is suggested that courtroom assessments of the effects ofdefamatory communications on others may be influenced by suchthird-person perceptions.     

MEASURING THE WELFARE GAIN FROM PERSONAL COMPUTERS

The welfare gain to consumers from the introduction of personal computers (PCs) is estimated. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good will not be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of PCs is 2%–3% of consumption expenditure. (JEL E01, E21, O33, O47)     

Accommodation without Resident Staff for Ex-Psychiatric Patients: Changing Trends and Needs

Summary This paper deals with accommodation without resident staff providedin the community for ex-psychiatric patients. Existing evidenceabout this kind of accommodation shows that it is provided largelyfor an elderly, institutionalised, chronically handicapped group.Recent trends in hospital provision (especially the closureof long stay beds) would seem to suggest that in the futuresuch accommodation may have to provide more for a younger, morelively population coming from the community itself. A survey of such accommodation in one metropolitan local authorityarea was carried out in 1977–78 to investigate if suchchanges were being reflected in the population and regimes ofhomes. The results indicate that to some extent, this is thecase. Policy implications arising from these findings are discussed.