Bargaining Under Time Pressure

69 Pages Posted: 4 Feb 2016

Date Written: January 11, 2016

Abstract

We experimentally investigate the effect of time pressure in a rich-context, unstructured bargaining game with earned status and competing reference points. Our results show that average opening proposals, concessions, and agreed shares are very similar across different levels of time pressure. Nevertheless, as predicted, time pressure systematically influenced agreements. In particular, the likelihood of bargainers reaching the explicit reference point outcome in agreements increases with time pressure, and the likelihood of reaching the implicit reference point (equal division) in agreements decreases with time pressure. Disagreement rates and the frequency of last-moment agreements are strongly affected: the disagreement rate rises dramatically with time pressure, and last-moment agreements are significantly more frequent. This effect is explained by a stronger connection between the tension in first proposals and the final bargaining outcome under time pressure than without time pressure.

Keywords: bargaining, disagreements, last-moment agreements, reference points, time pressure

JEL Classification: C710, C910, D740

Suggested Citation

Karagözoğlu, Emin and Kocher, Martin G., Bargaining Under Time Pressure (January 11, 2016). CESifo Working Paper Series No. 5685, Available at SSRN: https://ssrn.com/abstract=2727156 or http://dx.doi.org/10.2139/ssrn.2727156

Emin Karagözoğlu (Contact Author)

Bilkent University ( email )

Bilkent, Ankara 06533
Turkey
+90-312-2901955 (Phone)
+90-312-2665140 (Fax)

HOME PAGE: http://www.bilkent.edu.tr/~karagozoglu/

Martin G. Kocher

University of Vienna ( email )

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

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