Bargaining Under Time Pressure

69 Pages Posted: 4 Feb 2016

See all articles by Emin Karagözoğlu

Emin Karagözoğlu

Bilkent University

Martin G. Kocher

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Göteborg University - School of Business, Economics and Law; Queensland University of Technology - School of Economics and Finance

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

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

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

Göteborg University - School of Business, Economics and Law ( email )

Vasagatan 1
Goteborg, 40530
Sweden

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

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