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Bénabou, R., Tirole, J. (2009). Over My Dead Body: Bargaining and the Price of Dignity. American Economic Review: Papers & Proceedings 99:2, 459–465

Concerns of pride, dignity, and the desire to “keep hope” about future options often lead individuals and groups to walk away from reasonable offers, try to shift blame for failure onto others or take refuge in political utopias. Costly impasses and conflicts result, such as trials, divorces, strikes, the  scapegoating of minorities for economic hardships, and wars. A key and puzzling aspect of these processes is the role played by wishful rationalizations and delusions, as attested by field observers (e.g., Truman F. Bewley (1999) in the context of labor relations; Kevin Woods, James Lacey, and Williamson Murray (2006) in that of war), as well as controlled experiments. Leigh Thompson and George Loewenstein (1992) and Linda C. Babcock et al. (1995) thus demonstrate how
subjects in bargaining situations with common knowledge spontaneously generate, through self-serving processing and recall of the same evidence, divergent beliefs about the fairness of their cause and wishful predictions of outcomes, and how these are associated to costly delays and disagreements.

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Authors

Bénabou, Roland J. M.

Roland Bénabou joined the faculty of Princeton University in 1999 and holds a joint appointment in the Department of Economics and the Woodrow Wilson School of Public and International Affairs. Bénabou’s research spans both macroeconomic and microeconomic areas, such as the...

Tirole, Jean

Jean Tirole is Scientific Director of IDEI, Member of the Toulouse School of Economics (TSE), Ingénieur général des Ponts et Chaussées and Chairman of the Board of Directors, Toulouse School of Economics.

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