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Cooling-Off in Negotiations - Does It Work?

Author

Listed:
  • Oechssler, Jörg

    (Department of Economics, University of Heidelberg)

  • Roider, Andreas

    (Department of Economics, University of Heidelberg)

  • Schmitz, Patrick W.

    (Staatswissenschaftliches Seminar, Universität Köln)

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 coolingoff 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., 2008. "Cooling-Off in Negotiations - Does It Work?," Sonderforschungsbereich 504 Publications 08-06, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  • Handle: RePEc:xrs:sfbmaa:08-06
    Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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