On the adjudication of conflicting claims: an experimental study

This paper reports an experimental study on three well-known solutions for problems of adjudicating con‡icting claims: the constrained equal-awards, the proportional, and the constrained equal-losses rules. We …rst let subjects play three games designed such that the unique equilibrium allocation coincides with the recommendation of one of these three rules. In addition, we let subjects play an additional game, that has the property that all (and only) strategy pro…les in which players coordinate on the same rule constitute a strict Nash equilibrium. While in the …rst three games subjects’play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device, especially when we frame the game with an hypothetical bankruptcy situation. We also administered a questionnaire to a di¤erent group of students, asking them to act as impartial arbitrators to solve (among others) the same problems played in the lab. Also in this case, respondents were sensitive to the framing of the questions, but the proportional rule was selected by the vast majority of respondents. JEL CLASSIFICATION NUMBER: C91, D63, D74