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Driving a hard bargain is a balancing act: how social preferences constrain the negotiation process

Yola Engler () and Lionel Page ()
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Theory and Decision, 2022, vol. 93, issue 1, No 2, 7-36

Abstract: 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. 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. The bargaining outcome is therefore critically influenced by the balance of toughness and kindness signalled through the offers made in the haggling phase.

Keywords: Bargaining; First offers; Behavioural game theory; Intention based preferences (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11238-021-09835-y

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