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Cooling-Off in Negotiations - Does It Work?

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

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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.

Item Type: Working paper
Date Deposited: 12. May 2009 13:16
Date: 2008
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: negotiations , ultimatum game , emotions , cooling-off , cognitive abilities , behavioral biases , internet experiment
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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