Participation Costs for Responders Can Reduce Rejection Rates in Ultimatum Bargaining

Wichardt, Philipp C.; Schunk, Daniel; Schmitz, Patrick W.

doi:10.2139/ssrn.1314763

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

See all articles by Philipp C. Wichardt

Philipp C. Wichardt

University of Rostock - Department of Economics

Daniel Schunk

Johannes Gutenberg University Mainz - Gutenberg School of Economics and Management; University of Zurich - Department of Economics

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Date Written: December 1, 2008

Abstract

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

Wichardt, Philipp C. and Schunk, Daniel and Schmitz, Patrick W., Participation Costs for Responders Can Reduce Rejection Rates in Ultimatum Bargaining (December 1, 2008). University of Zurich Institute for Empirical Research in Economics Working Paper No. 398. Available at SSRN: https://ssrn.com/abstract=1314763 or http://dx.doi.org/10.2139/ssrn.1314763