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What constitutes a fair exchange?

Fairness has two functions:

Establishes Criterion for negotiation
Creates arguments for further negotiation

Rules of Distributive Justice –

Equity – The person who puts in the most deserves the most – research suggests that equity is a fundamental rule that people use in daily life, merit increases et al are based on equity. We are socialized to think this way; we are willing to accept less compensation as long as we are sure that someone else has produced more, and therefore deserves more. Biases –
Egocentric Bias – We all believe that we contribute things of greater value than other people think we contribute. Sometimes a defensive position, esp. if we know we contributed less. Also, people remember and see their own contributions better than the contributions of others, a memory bias, and selective attention. Ownership effect, the same idea is better when generated by me than when it’s generated by you.
Comparisons – Historical comparisons – comparing self with self. What I did this year should yield a larger raise than last year if I worked harder this year. External factors account for disparities, e.g. smaller pool from which to draw raises in a given year. Interpersonal comparison – comparing self with someone like self - what raise did I get compared to what someone with same position and tenure as me got? Collective comparisons – Comparing self to group – What raise did I get compared to a group average? How does my group compare to other groups?

What to do if you aren’t treated equitably?

Reduce contribution
Demand compensation
Restore Psychological Equity – rationalize the inequity with intangibles, e.g. at Northwestern, an employee is part of the NU atmosphere, easy to manage work/life.
Quit

What about the person getting more than he or she deserves? They could compensate the victims (those paid less than they deserve), but most of the time they restore psychological equity by rationalizing the disparity (I deserve it, or I have been the victim in the past, so this benefit compensates for the past (transrelational equity). Study showed that if A was given more than B for the same work, B would cheat C and D until he is “even”.

The Allocator, the one who created the inequity, could say he or she was wrong and re-allocate, but usually justifies the decision, sometimes using made-up rationale, or a promise to make up for the inequity in the future (which may make a victim of someone else).


Status – the person with the highest status deserves the most. Seniority is an element of status. Equity theorists claim that status and equity rationale are the same, but this assumes that the people at the top of an organization are contributing commensurate with their status.

Need – the people who need the most get the most. Leads to rewarding the needy, rather than the hardest working or the longest tenured, and the budget rule of spent it or lose it.

Equality – Everyone gets an equal share of the pie. Used when under time pressure, when the pie is small, or if a one-time windfall is distributed. Equality is “the excess resource rule.” Advantages are that equality reduces open conflict, and it’s a status boost, creates feeling that all are contributing. Can lead to “pathological egalitarianism”, resistance to any sign of inequality.

Deutch – Conflict/Hidden Conflict

A. Types
Vertical Conflict – Win or lose
Cotangential - outcome depends on cooperation; one party can prevent a desirable outcome for the other by not cooperating.
Misattributed Conflict – the wrong people are fighting each other.
Displaced Conflict – Two parts: a) Manifest Level –what people are saying to each other b. Latent Level – what parties aren’t saying, a hidden agenda.
False Conflict – A misperception of events causes this conflict.

B. Issues
Resource Scarcity
Relationships – Power – money issues in marriages are often fights over control and power rather than a fight over scarce resources.
Values – ideal states, things we’d like to be true. Research suggests that value conflicts are the hardest to resolve. Research suggests that if another party disagrees with you on some values, the assumption is that they disagree on all values. Pro-life and pro-choice advocates agree score the same on choice and life values, but prioritize differently, and make that difference the most important one.
Beliefs – A statement of what is.
Preferences – Things like habits are preferences. The more a couple reports that spouses have annoying habits, the likelier the couple will divorce within a decade.

People will either resolve conflicts cooperatively or competitively. People are biased to assume that the person with whom they are in conflict are more different from themselves than they actually are.

Factors that contribute to competition/cooperation:

1. Equality breeds competition – the more people consider themselves equal to the other side, the likelier they will be to compete.
2. A claim of inherent superiority creates competition.3. Links – the way the parties are used to interacting will be applied to new situations.