You Are Not in My Boat: Common Fate and Similarity Attractors in Bargaining Settings

Sharing a common fate with some people but not others may affect how economic agents behave within firms and organizations. Recognizing that many bilateral transactions occur both within and between groups sharing some degree of common fate, we present an experimental test of the effect of common fate in bargaining settings. Virtually all subjects differentiating between insiders and outsiders discriminate against outsiders. Within-group cooperation was not increased, but between-group conflict was. We also test, and find support for, theories of similarity-based decision-making. We develop and use a generally applicable technique to understand framing effects, based on identifying similarity attractors.