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Cooling-Off in Negotiations - Does It Work?

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Author Info
Oechssler, Jörg
Roider, Andreas
Schmitz, Patrick W.

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Abstract

Negotiations frequently end in conflict after one party rejects a final offer. In a large-scale internet experiment we investigate whether a 24-hour cooling-off period leads to fewer rejections in ultimatum bargaining. We conduct a standard cash treatment and a lottery treatment, where subjects received lottery tickets for several large prizes - emulating a high-stakes environment. In the lottery treatment, unfair offers are less frequently rejected, and cooling-off significantly reduces the rejection rate further. In the cash treatment, rejections are more frequent and remain so after cooling-off. This treatment difference is particularly pronounced for subjects with lower cognitive abilities.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6807.

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Date of creation: Apr 2008
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Handle: RePEc:cpr:ceprdp:6807

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Related research
Keywords: behavioural biases; cognitive abilities; cooling-off; emotions; internet experiment; negotiations; ultimatum game;

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Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Oechssler, Jörg, 2009. "Searching beyond the lamppost: Let’s focus on economically relevant questions," Working Papers 0486, University of Heidelberg, Department of Economics. [Downloadable!]
  2. Oechssler, Jörg & Roider, Andreas & Schmitz, Patrick W., 2008. "Cognitive Abilities and Behavioral Biases," Sonderforschungsbereich 504 Publications 08-05, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
    Other versions:
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