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Participation costs for responders can reduce rejection rates in ultimatum bargaining

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  • Philipp C. Wichardt
  • Daniel Schunk
  • Patrick W. Schmitz

Abstract

This paper reports data from an ultimatum mini-game in which responders first had to choose whether or not to participate. Participation was costly, but the participation cost was smaller than the minimum payoff that a responder could guarantee himself in the ultimatum game. Compared to a standard treatment, we find that the rejection rate of unfavorable offers is significantly reduced when participation is costly. A possible explanation based on cognitive dissonance is offered.

Suggested Citation

  • Philipp C. Wichardt & Daniel Schunk & Patrick W. Schmitz, 2008. "Participation costs for responders can reduce rejection rates in ultimatum bargaining," IEW - Working Papers 398, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:398
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    References listed on IDEAS

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    Cited by:

    1. Elmar Lukas & Andreas Welling, 2011. "The Impact of Managerial Flexibility on Negotiation Strategy and Bargaining Power," FEMM Working Papers 110008, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    2. Smith, Vernon L. & Wilson, Bart J., 2018. "Equilibrium play in voluntary ultimatum games: Beneficence cannot be extorted," Games and Economic Behavior, Elsevier, vol. 109(C), pages 452-464.
    3. Güth, Werner & Kocher, Martin G., 2014. "More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 396-409.

    More about this item

    Keywords

    Cognitive dissonance; Participation costs; Sunk costs; Ultimatum game;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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