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Behavioral Law and Economics: Explaining Bargaining Impasse: The Role of Self-serving Biases

We review studies conducted by ourselves and coauthors that document a "self-serving" bias in judgments of fairness and demonstrate that the bias is an important cause of impasse in negotiations. We discuss experimental evidence showing that (a) the bias causes impasse; (b) it is possible to reduce impasses by debiasing bargainers; and (c) the bias results from selective evaluation of information. We also review results from a field study of negotiations between teachers' unions and school boards in Pennsylvania that both documents the fairness bias in a naturalistic setting and demonstrates its impact on strikes.