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

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  • Yola Engler

    (Home 24 SE)

  • Lionel Page

    (University of Technology Sydney)

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.

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  • Yola Engler & Lionel Page, 2022. "Driving a hard bargain is a balancing act: how social preferences constrain the negotiation process," Theory and Decision, Springer, vol. 93(1), pages 7-36, July.
    • Handle: RePEc:kap:theord:v:93:y:2022:i:1:d:10.1007_s11238-021-09835-y
    DOI: 10.1007/s11238-021-09835-y
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    1. Send, Jonas & Serena, Marco, 2022. "An empirical analysis of insistent bargaining," Journal of Economic Psychology, Elsevier, vol. 90(C).

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    More about this item

    Keywords

    Bargaining; First offers; Behavioural game theory; Intention based preferences;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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