Cooling-Off in Negotiations - Does It Work?

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

No 463, Working Papers from University of Heidelberg, Department of Economics

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.

Keywords: negotiations; ultimatum game; emotions; cooling-off; cognitive abilities; behavioral biases; internet experiment (search for similar items in EconPapers)
JEL-codes: C78 C99 D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: Written
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Related works:
Working Paper: Cooling-Off in Negotiations - Does It Work? (2008)
Working Paper: Cooling-Off in Negotiations - Does It Work? (2008)
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