BazermanMoore

120 Chapter 7: Fairness and Ethics in Decision Making
Chapter 4 shows that people often compare what they have against a reference
point. Sometimes the status quo, such as one’s current wealth, serves as the reference
point (Kahneman & Tversky, 1979). However, Loewenstein, Thompson, and Bazerman
(1989) argue that the outcomes of others commonly act as a key reference point in
interpersonal decision settings and that interpersonal comparisons can overwhelm concern
for personal outcomes in rating potential resolutions of a dispute. For example, in
an experiment that asked participants to assess multiple outcomes to a dispute one at a
time, individuals typically rated $500 for themselves and $500 for another person as a
more satisfactory outcome than $600 for themselves and $800 for the other person.
Bazerman, Loewenstein, and White (1992) combined the logic on how concerns
for others influence our decisions with the work on joint versus separate preference
reversals from Chapter 4 to examine when people are concerned with the outcomes of
others. In the first empirical demonstration of joint versus separate preference reversals,
Bazerman, Loewenstein, and White (1992) showed that while individuals care far
more about social comparisons when rating a specific outcome, absolute individual
outcomes are more important in actual choice behavior. Seventy percent rated the outcome
of $400 for oneself and $400 for the other party as more acceptable than $500
for oneself and $700 for the other party when asked to evaluate these outcomes separately.
However, only 22 percent chose $400 for oneself and $400 for the other party
over $500 for oneself and $700 for the other party when asked to choose between the
two. This basic pattern is consistent across many other comparisons and across a wide
variety of contexts. When a series of joint outcomes are evaluated individually, the outcomes
of others become the reference point. When choosing between two outcomes
for oneself, the outcomes of others are not needed as a reference point, since the two
outcomes can be easily compared. In this type of situation, the outcomes of others
become less relevant. Instead, the salient attribute in a choice task is one’s own
outcome.
Blount and Bazerman (1996) extended this result to a real situation involving real
payoffs. They agreed to recruit participants for a colleague’s experiment. One group of
potential participants was offered $7 to participate in a forty-minute experiment, knowing
that all participants would be receiving $7. A second group was offered $8 to participate
in a forty-minute experiment, knowing that some participants were arbitrarily
(based on the last digit of their social security number) being offered $10. A third group
was given an opportunity (1) to participate in a forty-minute experiment in which everyone
was being paid $7; (2) to participate in a forty-minute experiment in which some
participants, including themselves, would receive $8 and others would receive $10; or
(3) not to participate. Although significantly more participants in the first group chose
to participate (72 percent) than in the second group (55 percent), the majority of participants
in the third group (56 percent) chose to participate in the experiment that
gave them $8 while some others were given $10 (16 percent chose the experiment in
which everyone received $7; 28 percent chose not to participate in either). Thus, in
evaluating whether to participate in one specific experiment, the outcomes of other
potential participants were critical. However, when multiple opportunities were available,
participants were able to compare what they would receive across the multiple
experiments, and the outcomes of others became less important.