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Cooling-Off in Negotiations - Does It Work?

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  • Oechssler, Jörg
  • Roider, Andreas
  • Schmitz, Patrick W.

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 receive 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.

Suggested Citation

  • Oechssler, Jörg & Roider, Andreas & Schmitz, Patrick W., 2009. "Cooling-Off in Negotiations - Does It Work?," Working Papers 0463, University of Heidelberg, Department of Economics.
  • Handle: RePEc:awi:wpaper:0463
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    More about this item

    Keywords

    negotiations; ultimatum game; emotions; cooling-off; cognitive abilities; behavioral biases; internet experiment;
    All these keywords.

    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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