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Endogenous cool-off periods

Author

Listed:
  • van Oldeniel, Mark
  • Peter, Noemi

Abstract

We run an ultimatum game experiment where cool-off periods can emerge endogenously, that is, where proposers can decide to impose a waiting period on responders. Previous research focused on cool-off periods that were exogenously imposed by the researcher, but in real life people can make deliberate choices to impose such periods on others for strategic reasons. Since in our experiment cool-off periods can be imposed endogenously, we can answer several novel research questions. First, how willing are individuals to impose endogenous cool-off periods on others? Second, do offers change if cool-off is an option? Third, are endogenously imposed cool-offs effective? Finally, how does the possibility of imposing an endogenous cool-off period affect bargaining breakdowns and earnings? We find that 40% of proposers choose to impose a cool-off period on responders. Proposers make significantly lower offers when they can impose a cool-off period on responders. Endogenous cool-off periods are not effective in increasing the overall acceptance rate. The possibility to create an endogenous cool-off period does not have a significant effect on bargaining breakdowns or earnings overall. However, it lowers responder earnings significantly, as it allows proposers to exploit the timing choice to make a lower offer. Our results highlight that instead of helping to solve conflicts, the possibility to create cool-off periods hurts the less powerful party.

Suggested Citation

  • van Oldeniel, Mark & Peter, Noemi, 2025. "Endogenous cool-off periods," Journal of Economic Behavior & Organization, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:jeborg:v:238:y:2025:i:c:s0167268125003567
    DOI: 10.1016/j.jebo.2025.107237
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    References listed on IDEAS

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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