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Participation costs for responders can reduce rejection rates in ultimatum bargaining

By Philipp C. Wichardt, Daniel Schunk and Patrick W. Schmitz

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.Cognitive dissonance; Participation costs; Sunk costs; Ultimatum game

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