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Cooling Off in Negotiations: Does it Work?

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  • Jörg Oechssler
  • Andreas Roider
  • Patrick W. Schmitz

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. In the lottery treatment, unfair offers are less frequently rejected, and cooling off reduces the rejection rate further. In the cash treatment, rejections are more frequent and remain so after cooling off. We also study the effect of subjects' degree of icognitive reflectionj on their behavior.

Suggested Citation

  • Jörg Oechssler & Andreas Roider & Patrick W. Schmitz, 2015. "Cooling Off in Negotiations: Does it Work?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(4), pages 565-588, December.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201512)171:4_565:coindi_2.0.tx_2-v
    DOI: 10.1628/093245613X14307212950056
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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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