Bargaining under Time Pressure

Karagözoğlu, Emin und Kocher, Martin G. (2015): Bargaining under Time Pressure. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2015-21

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.

• Dokumententyp: Paper
• Keywords: Bargaining; Disagreements; Last-moment Agreements, Reference Points; Time Pressure.
• Fakultät: Volkswirtschaft > Munich Discussion Papers in Economics
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: C71, C91, D74
• Sprache: Englisch

Literaturliste

Anbarcı, N., and Feltovich, N. (2013) How Sensitive are Bargaining Outcomes to Changes in Disagreement Payoffs? Experimental Economics, 16: 560–596. Babcock, L., and Loewenstein, G. (1997) Explaining Bargaining Impasse: The Role of Self-serving Biases. Journal of Economic Perspectives, 11: 109–126. Babcock, L., Loewenstein, G., Issacharoff, S., and Camerer, C. (1995) Biased Judgments of Fairness in Bargaining. American Economic Review, 85: 1337–1343. Bazerman, M., and Neale, M. (1983) Heuristics in Negotiation: Limitations to Dispute Resolution Effectiveness. M.H Bazerman, R Lewicki (Eds.), Negotiations in Organizations, Sage, Beverly Hills, CA. Ben Zur, H., and Breznitz, S. J. (1981) The Effect of Time Pressure on Risky ChoiceBehavior. Acta Psychologica, 47: 89–104. Birkeland, S., and Tungodden, B. (2014) Fairness Motivation in Bargaining: A Matter of Principle. Theory and Decision, 77: 125–151. Bochet, O., and Siegenthaler, S. (2013) Better Later than Never? An Experiment on Bargaining under Adverse Selection. Working Paper. Bolton, G. E., Chatterjee, K., and McGinn, K. L. (2003) How Communication Links Influence Coalition Bargaining: A Laboratory Investigation. Management Science, 49: 583–598. Bolton, G. E., and Karagözoğlu, E. (2013) On the Interaction of Hard and Soft Bargaining Leverage: The Influence of Credible Claims. Working Paper, Bilkent University. Bulow, J. I., and Klemperer, P. (1999) The Tobacco Deal. CEPR Discussion Papers # 2125. Camerer, C. (2003). Behavioral Game Theory: Experiments in Strategic Interaction. Princeton University Press. Camerer, C., Nave, G., and Smith, A. (2015) Dynamic Unstructured Bargaining with Private Information and Deadlines: Theory and Experiment. Caltech Working Paper. Cappelletti, D., Güth, W., and Ploner, M. (2011) Being of Two Minds: Ultimatum Offers Under Cognitive Constraints. Journal of Economic Psychology, 32: 940–950. Carnevale, P. J. D., and Lawler, E. J. (1986) Time Pressure and the Development of Integrative Agreements in Bilateral Negotiations. Journal of Conflict Resolution, 30: 636–659. Carnevale, P. J. D., and Pruitt, D. G. (1992) Negotiation and Mediation. Annual Review of Psychology, 43: 531–582. Carnevale, J. D., O’Connor, K. M., and McCusker, C. (1993) Time Pressure in Negotiation and Mediation. In O. Svenson, and A. J. Maule (eds.), Time Pressure and Stress in Human Judgment and Decision Making. New York: Plenum Press, 117–127. Carroll, J. S., and Payne, J. W. (1991) An Information Processing Approach to Two- arty Negotiation. Research on Negotiation in Organizations, 3: 3–34. Christensen-Szalanski, J. J. J. (1980) A Further Examination of the Selection of roblem-solving Strategies: The Effects of Deadlines and Analytic Aptitudes. Organizational Behavior and Human Performance, 25: 107–122. Crockett, S., Smith, V. L., and Wilson, B. J. (2009) Exchange and Specialization as a Discovery Process. Economic Journal, 119: 1162–1188. Dalbert, C., Montada, L., and Schmitt, M. (1987) Glaube an eine gerechte Welt als Motiv: Validierungskorrelate zweier Skalen. Pschologische Beiträge, 29: 596–615. De Dreu, C. K. W., Koole, S. L., and Oldersma, F. L. (1999) On the Seizing and reezing of Negotiator Inferences: Need for Cognitive Closure Moderates the Use of Heuristics in Negotiation. Personality and Social Psychology Bulletin, 25: 348–362. De Dreu, C., Weingart, R., and Kwon, S. (2000) Influence of Social Motives on Integrative Negotiation: A Meta-analytic Review and Test of Two Theories. Journal of Personality and Social Psychology, 78: 889–905. Dezső, L., Loewenstein, G., Steinhart, J., Neszveda, G., and Szászi, B. (2015) The ernicious Role of Asymmetric History in Negotiations. Journal of Economic Behavior and Organization, forthcoming. Dohmen, T., Falk, A., Huffman, D., Sunde, U., Schupp, J., and Wagner, G. G. (2011) Individual Risk Attitudes: Measurement, Determinants, and Behavioral onsequences. Journal of the European Economic Association, 3: 522–550. Druckman, D. (1971) The Influence of the Situation in Inter-party Conflict. Journal of Conflict Resolution, 15: 523–554. Druckman, D. (1994) Determinants of Compromising Behavior in Negotiation: A Meta- Analysis. Journal of Conflict Resolution, 15: 523–555. Embrey, M., Hyndman, K., and Riedl, A. (2014) Bargaining with a Residual Claimant: n Experimental Study. Working Paper, Maastricht University. Feng, C., Luo, Y., Gu, R., Broster, L. S., Shen, X, Tian,T., Luo, Y-J, and Krueger, F. 2013) The Flexible Fairness: Equality, Earned Entitlement, and Self-Interest. Plos One, 8: 1–18. Fischbacher, U. (2007) z-Tree: Zurich Toolbox for Ready-made Economic Experiments. Experimental Economics, 20: 171–178. Franco-Watkins, A. M., Edwards, B. D., and Acuff Jr, R. E. (2013) Effort and Fairness in Bargaining Games. Journal of Behavioral Decision Making, 26: 79–90. Forsythe, R., Kennan, J., and Sopher, B. (1991) An Experimental Analysis of Strikes n Bargaining Games with One-sided Private Information. American Economic eview, 81: 253–278. Gächter, S., and Riedl, A. (2005) Moral Property Rights in Bargaining with Infeasible Claims. Management Science, 51: 249–263. Gächter, S., and Riedl, A. (2006) Dividing Justly in Bargaining Problems with Claims Normative Judgments and Actual Negotiations. Social Choice and Welfare, 27: 571– 594. Gächter, S., Karagözoğlu, E., and Riedl, A. (2015) When the Going Gets Tough or Easy in Bargaining. Working Paper. Gneezy, U., Haruvy, E., and Roth, A. E. (2003) Bargaining Under a Deadline: Evidence from the Reverse Ultimatum Game. Games and Economic Behavior, 45: 347–368. Gosling, S. D., Rentfrow, P. J., and Swann Jr., W. B. (2003) A Very Brief Measure of he Big-Five Personality Domains. Journal of Research in Personality, 37: 504–528. Güth, W., Levati, M. V., and Maciejovksy, B. (2005) Deadline Effects in Sequential Bargaining: An Experimental Study. International Game Theory Review, 7: 117– 135. Haidt, J. (2001) The Emotional Dog and its Rational Tail: A Social Intuitionist Approach to Moral Judgment, Psychological Review, 108: 814–834. Harinck, F., and De Dreu, C. K. W. (2004) Negotiating Interests or Values and Reaching Integrative Agreements: The Importance of Time Pressure and Temporary Impasses. European Journal of Social Psychology, 34: 595–611. Karagözoğlu,E., and Riedl,A.(2015) Performance Information,Production Uncertainty, and Subjective Entitlements in Bargaining. Management Science, 61:2611–2626. Kocher, M., Pahlke, J., and Trautmann S. T. (2013) Tempus Fugit: Time Pressure in Risky Decisions. Management Science. 59: 2380–2391. Kocher, M., and Sutter, M. (2006) Time is Money – Time Pressure, Incentives, and the Quality of Decision-making. Journal of Economic Behavior and Organization, 61: 375–392. Kruglanski, A. W., and Freund, T. (1983) The Freezing and Unfreezing of Lay- inferences: Effects on Impressional Primacy, Ethnic Stereotyping, and Numerical Anchoring. Journal of Experimental Social Psychology, 19: 448–468. Leider, S., and Lovejoy, W. (2014) Bargaining in Supply Chains. University of Michigan Ann Arbor, Working Paper. Lim, S. A., and Murnighan, K. J. (1994) Phases, Deadlines, and the Bargaining Process. Organizational Behavior and Human Decision Processes, 58: 153–171. Lindner, F., and Sutter, M. (2013) Level-k Reasoning and Time pressure in the 11-20 Money Request Game. Economics Letters, 120: 542–545. Luhan, W., Poulsen, O., and Roos, M. (2013) Unstructured Bargaining over an Endogenously Produced Surplus and Fairness Ideals: An Experiment. Ruhr Economic Papers 0438. Maule, J., and Mackie, P. (1990) A Componential Investigation of the Effect of eadlines on Individual Decision Making. In K. Borchering, O. I. Larichev & D. Messick (Eds.), Contemporary issues in decision making, (pp. 449-461). Amsterdam: North-Holland. Messick, D. M., and Sentis, K. P. (1979) Fairness and Preference. Journal of Experimental Social Psychology, 15: 418–434. Messick, D. M., and Sentis, K. P. (1983) Fairness, Preference, and Fairness Biases. In Equity Theory: Psychological and Sociological Perspectives, (Eds. D. M. Messick and K. S. Cook), Praeger, New York, 61–94. Mosterd, I., and Rutte, C. G. (2000) Effects of Time Pressure and Accountability to Constitutents on Negotiation. International Journal of Conflict Management, 1: 227– 247. Myrseth, K. O. R., and Wollbrant, C. (2015) Less Cognitive Conflict Does not Imply Choice of the Default Option: Commentary on Kieslich and Hilbig (2014). Judgment and Decision Making, 10: 277–279. Nash, J. (1950) The Bargaining Problem. Econometrica, 18: 155–162. Payne, J. W., Bettman, J. R., and Johnson, E. J. (1988) Learning, Memory, and Cognition. Journal of Experimental Psychology, 14: 534–552. Rand, D. G., Greene, J. D., and Nowak, M. A. (2012) Spontaneous Giving and Calculated Greed. Nature, 489: 427–430. Rand, D. G., Peysakhovich, A., Kraft-Todd, G.T., Newman, G. E., Wurzbacher, O., Nowak, M. A., and Greene, J. D. (2014) Social Heuristics Shape Intuitive Cooperation. Nature Communications, 5: 1–12. Roth, A. E. (1985) Toward a Focal-Point Theory of Bargaining. In Game-Theoretic Models of Bargaining, (Ed. A. E. Roth), Cambridge: Cambridge University Press 259–268. Roth, A. E., and Malouf, M. (1979) Game Theoretical Models and the Role of Information in Bargaining. Psychological Review, 86: 579–59. Roth, A. E., Murnighan, J. K., and Schoumaker, F. (1988) The Deadline Effect in Bargaining: Some Experimental Evidence. American Economic Review, 78: 806–823. Rubinstein, A. (1982) Perfect Equilibrium in a Bargaining Model. Econometrica, 50:97–109. Rubinstein, A. (2007) Instinctive and Cognitive Reasoning: A Study of Response Times. Economic Journal, 117: 1243–1259. Schweinsberg, M., Ku, G., Wang, C. S., and Pillutla, M. M. (2012) Starting High and Ending with Nothing: The Role of Anchors and Power in Negotiations. Journal of Experimental Social Psychology, 48: 226–231. Spiliopoulos, L., and Ortmann, A. (2014) The BCD of Response Time Analysis in Experimental Economics. Working Paper, SSRN. Stuhlmacher, A. F., Gillespie, T. L., and Champagne, M. V. (1998) The Impact of Time Pressure in Negotiation: A Meta-Analysis. International Journal of Conflict Management, 9: 97–116. Sutter, M., Kocher, M., and Strauss, S. (2003) Bargaining Under Time Pressure in an Ultimatum Game. Economics Letters, 81: 341–347. Svenson, O., and Edland, A. (1987) Change of Preferences under Time Pressure: Choices and Judgments. Scandinavian Journal of Psychology, 28: 322–330 Tinghög G., Andersson D., Bonn C., Böttiger H., Josephson C., et al. (2013) Intuition and Cooperation Reconsidered. Nature, 498: E1–E2. Valley, K., Thompson, L., Gibbons, R., and Bazerman, M. H. (2002) How Communication Improves Efficiency in Bargaining Games. Games and Economic Behavior, 38: 127–155. Van Winden, F. (2007) Affect and Fairness in Economics. Social Justice Research, 20: 35–52. Verkoeijen, P. P. J. L., and Bouwmeester, S. (2014) Is Spacing Really the “Friend of Induction”? Frontiers in Psychology, 5: 259, 1–8. Yukl, G. A., Malone, M. P., Hayslip, B., and Pamin, T. A. (1976) The Effects of Time Pressure and Issue Settlement Order on Integrative Bargaining. Sociometry, 39: 277–281. Zakay, D. (1993) Time Estimation Methods – Do They Influence Prospective Duration Estimates? Perception, 22: 91–101.