Cooling-Off in Negotiations - Does It Work?

Negotiations frequently end in conflict after one party rejects a final offer.In a large-scale internet experiment, we investigate whether a 24-hour coolingoffperiod leads to fewer rejections in ultimatum bargaining. We conduct astandard cash treatment and a lottery treatment, where subjects receive lotterytickets for several large prizes - emulating a high-stakes environment. In thelottery treatment, unfair offers are less frequently rejected, and cooling-off significantlyreduces the rejection rate further. In the cash treatment, rejectionsare more frequent and remain so after cooling-off. This treatment difference isparticularly pronounced for subjects with lower cognitive abilities....