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Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process

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  • Engler, Yola
  • Page, Lionel

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

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  • Engler, Yola & Page, Lionel, 2021. "Driving a Hard Bargain is a Balancing Act: How social preferences constrain the negotiation process," SocArXiv 5kw3f_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:5kw3f_v1
    DOI: 10.31219/osf.io/5kw3f_v1
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    References listed on IDEAS

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    1. Gary Charness & David Masclet & Marie Claire Villeval, 2014. "The Dark Side of Competition for Status," Management Science, INFORMS, vol. 60(1), pages 38-55, January.
    2. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    3. Nathaniel T. Wilcox & Nick Feltovich, 2000. "Thinking Like a Game Theorist: Comment," Monash Economics Working Papers archive-30, Monash University, Department of Economics.
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