Participation Costs for Responders Can Reduce Rejection Rates in Ultimatum Bargaining
University of Zurich Institute for Empirical Research in Economics Working Paper No. 398
9 Pages Posted: 11 Dec 2008
Date Written: December 1, 2008
This paper reports data from an ultimatum mini-game in which responders first had to choose whether or not to participate. Participation was costly, but the participation cost was smaller than the minimum payoff that a responder could guarantee himself in the ultimatum game. Compared to a standard treatment, we find that the rejection rate of unfavorable offers is significantly reduced when participation is costly. A possible explanation based on cognitive dissonance is offered.
Keywords: Cognitive dissonance, participation costs, sunk costs, ultimatum
JEL Classification: C91, D63
Suggested Citation: Suggested Citation