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Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process

Author

Listed:
  • Yola Engler
  • Lionel Page

Abstract

We investigate the haggling process in bargaining. Using an experimental bargaining game, we find that a first offer has a significant impact on the bargaining outcome even if it is costless to reject. First offers convey information on the player's reservation value induced by his social preferences and they are most often accepted when they are not above the equal split. However, offers which request much more than the equal split induce punishing counter-offers triggered by the responder's social preferences. The bargaining outcome is therefore critically influenced by the balance of toughness and kindness signalled through the offers made in the haggling phase.

Suggested Citation

  • Yola Engler & Lionel Page, 2017. "Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process," QuBE Working Papers 051, QUT Business School.
  • Handle: RePEc:qut:qubewp:wp051
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    File URL: http://external-apps.qut.edu.au/business/documents/QuBEWorkingPapers/2017/Driving%20bargain.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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