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Cooling-Off in Negotiations - Does It Work?

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

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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