Why parties enter into unfair deals: the resentment factor

Justin Eugene Malbon

    Research output: Contribution to journalArticleResearchpeer-review


    Abstract: Unfair deals, which are prevalent, do not serve the interests of the harmed party to a deal nor society more generally. This article proposes a theory a?? here coined a??deal theorya?? a?? to explain a??dealora?? behaviours and motivations for offering unfair deals. The theory builds on insights offered by relational contract theory, the ultimatum bargaining game and behavioural economics, as well as making its own theoretical claims. It is here claimed that the dealor makes 3Rs cost benefit calculations a?? regulation, reputation and resentment costs a?? before deciding whether or not to offer an unfair deal. A dealor might seek to mitigate these costs by deploying cheat and bully strategies. The policy and legislative challenge is to harness the 3Rs costs to provide disincentives for unfair deals. This article pays particular attention to the resentment cost because its potential effectiveness in constraining unfair behaviour has generally been underestimated. It is claimed in this article that a heightened understanding of the strong partya??s incentives and motivations for offering and performing unfair deals, by using the insights offered by deal theory, can help improve legal, administrative, economic and other measures that can promote the interests of the harmed party and society more generally.
    Original languageEnglish
    Pages (from-to)137 - 175
    Number of pages39
    JournalAdelaide Law Review
    Issue number1
    Publication statusPublished - 2012

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