Experimental Economics

, Volume 6, Issue 1, pp 75–90 | Cite as

The Hot Versus Cold Effect in a Simple Bargaining Experiment

  • Jeannette Brosig
  • Joachim Weimann
  • Chun-Lei Yang


In this paper, the strategy method's impact on behavior in sequential bargaining games is investigated. Besides the decision procedure (hot versus cold), we varied the second mover punishment costs (high versus low). Significant impacts of both treatment variables were observed. For example, second movers punished significantly more often in the hot version of the low cost game. Furthermore, first mover behavior was significantly different in the hot and cold versions of both games. In the hot games, first mover behavior suggests an expectation of decreased rewards and/or punishments from second movers. We observed, however, no decrease in reward and an increase in punishment. The hot cold variable only informs first movers that the decision procedure used by second movers has changed. Therefore, first mover behavior must be shaped by their perceived assessment concerning how second movers make decisions. We argue that first mover behavior can be explained by the interaction of two well-known psychological effects: the consensus and positive self-image effects.

strategy method simple sequential bargaining games punishment emotions 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Alicke, M.D. and Largo, E. (1995). “The Role of the Self in the False Consensus Effect. ” Journal of Experimental Social Psychology. 31, 28–47.Google Scholar
  2. Allison, S.T., Messick, D.M., and Goethals, G.R. (1989). “On Being Better but not Smarter than Others. ” Social Cognition. 7, 275–296.Google Scholar
  3. Axelrod, R. (1984). The Evolution of Cooperation. New York: Basic.Google Scholar
  4. Bazerman, M.H., Moore, D.A., Tenbrunsel, A.E., Wade-Benzoni, K.A., and Blount, S. (1999). “Explaining how Preferences Change Across Joint Versus Separate Evaluation. ” Journal of Economic Behavior and Organization. 39, 41–58.Google Scholar
  5. Berg, J., Dickhaut, J., and McCabe, K. (1995). “Trust, Reciprocity, and Social History. ” Games and Economic Behavior. 10, 122–142.Google Scholar
  6. Blount, S. and Bazerman, M.H. (1996). “The Inconsistent Evaluation of Absolute Versus Comparative Payoffs in Labor Supply and Bargaining. ” Journal of Economic Behavior and Organization. 30, 227–240.Google Scholar
  7. Bolton, G.E., Brandts, J., and Ockenfels, A. (1998). “Measuring Motivations for the Reciprocal Responses Ob-served in a Simple Dilemma Game. ” Experimental Economics. 1, 207–219.Google Scholar
  8. Bolton, G.E. and Ockenfels, A. (2000). “ERC: A Theory of Equity, Reciprocity, and Competition. ” American Economic Review. 90, 166–193.Google Scholar
  9. Bosman, R., Sutter, M., and van Winden, F. (2000). “Emotional Hazard and Real Effort in a Power-to-Take Game: An Experimental Study. ” Working Paper.Google Scholar
  10. Brandts, J. and Charness, G. (2000). “Hot vs. Cold: Sequential Responses and Preference Stability in Experimental Games. ” Experimental Economics. 2, 227–238.Google Scholar
  11. Camerer, C.F., Knez, M., and Weber, R.E. (1996). “Virtual Observability in Ultimatum Bargaining and ‘Weak Link’ Coordination Games. ” Experimental Economics, Forthcoming.Google Scholar
  12. Charness, G. and Rabin, M. (2002). “Understanding Social Preferences with Simple Tests. ” Forthcoming in Quarterly Journal of Economics. 117, 817–869.Google Scholar
  13. Damasio, A.R. (1994). Descartes’ Error: Emotion, Reason, and the Human Brain. New York: Putnam.Google Scholar
  14. Darley, J.M. and Berscheid, E. (1967). “Increased Liking Caused by the Anticipation of Personal Contact. ” Human Relations. 20, 29–40.Google Scholar
  15. Dawes, R.M. (1989). “Statistical Criteria for Establishing a Truly False Consensus Effect. ” Journal of Experimental Social Psychology. 25, 1–17.Google Scholar
  16. Dawes, R.M. (1990). “The Potential Nonfalsity of the False Consensus Effect. ” In R.M. Hogarth (eds.), Insights in Decision Making: A Tribute to Hillel J. Einhorn. Chicago: University of Chicago Press, pp. 179–199.Google Scholar
  17. Dufwenberg, M. and Kirchsteiger, G. (1998). “A Theory of Sequential Reciprocity. ” CentER Discussion Paper No. 9837, Tilburg University.Google Scholar
  18. Elster, J. (1998). “Emotions and Economic Theory. ” Journal of Economic Literature. 36, 47–74.Google Scholar
  19. Engelmann, D. and Strobel, M. (forthcoming). “The False Consensus Effect Disappears if Representative Information and Monetary Incentives are Given. ” Experimental Economics.Google Scholar
  20. Falk, A. and Fischbacher, U. (1998). “A Theory of Reciprocity. ” Working Paper.Google Scholar
  21. Farwell, L. and Weiner, B. (1996). “Self-Perceptions of Fairness in Individual and Group Contexts. ” Personality and Social Psychology Bulletin. 22, 867–881.Google Scholar
  22. Fehr, E., Falk, A., and Fischbacher, U. (2000). “Testing Theories of Fairness-Intentions Matter. ” Institute for Empirical Research in Economics. University of Zürich. Working Paper No. 63.Google Scholar
  23. Fehr, E. and Schmidt, K. (1999). “A Theory of Fairness, Competition, and Cooperation. ” Quarterly Journal of Economics. 114, 817–868.Google Scholar
  24. Frank, R.H. (1988). Passion within Reason. New York: W.W. Norton & Company.Google Scholar
  25. Frijda, N.H. (1986). The Emotions. New York: Cambridge University Press.Google Scholar
  26. Gueth, W., Huck, S., and Mueller, W. (2001). “The Relevance of Equal Splits in Ultimatum Games. ” Games and Economic Behavior. 37, 161–169.Google Scholar
  27. Gueth, W., Huck, S., and Rapoport, A. (1998). “The Limitations of the Positional Order Effect: Can it Support Silent Threats and Non-Equilibrium Behavior?” Journal of Economic Behavior and Organization. 34, 313–325.Google Scholar
  28. Hirshleifer, J. (1993). “The Affections and the Passions. Their Economic Logic. ” Rationality and Society. 5, 185–202.Google Scholar
  29. Hoffman, E., McCabe, K.A., and Smith, V.L. (1998). “Behavioral Foundations of Reciprocity: Experimental Economics and Evolutionary Psychology. ” Economic Inquiry. 36, 335–352.Google Scholar
  30. Kaufman, B.E. (1999). “Emotional Arousal as a Source of Bounded Rationality. ” Journal of Economic Behavior and Organization. 38, 135–144.Google Scholar
  31. Keser, C. and Gardner, R. (1999). “Strategic Behavior of Experienced Subjects in a Common Pool Resource Game. ” International Journal of Game Theory. 28, 241–252.Google Scholar
  32. Krueger, J. and Clement, R.W. (1994). “The Truly False Consensus Effect: An Ineradicable and Egocentric Bias in Social Perception. ” Journal of Personality and Social Psychology. 67, 596–610.Google Scholar
  33. Lazarus, R.S. (1991). Emotion and Adaptation. New York: Oxford University Press.Google Scholar
  34. LeDoux, J. (1996). The Emotional Brain: The Mysterious Underpinnings of Emotional Life. New York: Simon & Schuster.Google Scholar
  35. Loewenstein, G. (1996). “Out of Control: Visceral Influences on Behavior. ” Organizational Behavior and Human Decision Processes. 65, 272–292.Google Scholar
  36. Loewenstein, G. (2000). “Emotions in Economic Theory and Economic Behavior. ” American Economic Review. Papers and Proceedings. 90, 426–432.Google Scholar
  37. Loewenstein, G. and Schkade, D. (1999). “Wouldn't it be Nice? Predicting Future Feelings.” In D. Kahneman et al. (eds.), Well-Being: The Foundations of Hedonic Psychology. New York, NY: Russell Sage Foundation, pp. 85–105.Google Scholar
  38. Marks, G. and Miller, N. (1987). “Ten Years of Research on the False-Consensus Effect: An Empirical and Theoretical Review. ” Psychological Bulletin. 102, 72–90.Google Scholar
  39. Messe, L.A. and Sivacek, J.M. (1979). “Predictions of Others’ Responses in a Mixed Motive Game: Self-Justification or False Consensus?” Journal of Personality and Social Psychology. 37, 602–607.Google Scholar
  40. Miller, N. and Marks, G. (1982). “Assumed Similarity Between Self and Other: Effect of Expectation of Future Interaction with that Other. ” Social Psychology Quarterly. 45, 100–105.Google Scholar
  41. Mitzkewitz, M. and Nagel, R. (1993). “Experimental Results on Ultimatum Games with Incomplete Information. ” International Journal of Game Theory. 22, 171–198.Google Scholar
  42. Mullen, B., Atkins, J.L., Champion, D.S., Edwards, C., Hardy, D., Story, J.E., and Venderklok, M. (1985). “The False Consensus Effect: AMeta-Analysis of 115 Hypothesis Tests. ” Journal of Experimental Social Psychology. 21, 263–283.Google Scholar
  43. Offerman, T. (2002). “Hurting Hurts More than Helping Helps. ” European Economic Review. 46, 423–437.Google Scholar
  44. Offerman, T., Sonnemans, J., and Schram, A. (1996). “Value Orientation, Expectations and Voluntary Contributions in Public Goods. ” The Economic Journal. 106, 817–845.Google Scholar
  45. Rabin, M. (1993). “Incorporating Fairness into Game Theory and Economics. ” American Economic Review. 83, 1281–1302.Google Scholar
  46. Rapoport, A. (1997). “Order of Play in Strategically Equivalent Games in Extensive Form. ” International Journal of Game Theory. 26, 113–136.Google Scholar
  47. Rapoport, A. and Fuller, M.A. (1998). “Coordination in Noncooperative Three-Person Games under Different Information Structures. ” Group Decision and Negotiation. 7, 363–382.Google Scholar
  48. Romer, P.M. (2000). “Thinking and Feeling. ” American Economic Review. Papers and Proceedings. 90, 439–443.Google Scholar
  49. Ross, L., Greene, D., and House, P. (1977). “The ‘False Consensus Effect': An Egocentric Bias in Social Perception and Attribution Processes. ” Journal of Experimental Social Psychology. 13, 279–301.Google Scholar
  50. Roth, A.E. (1995). “Bargaining Experiments. ” In J.H. Kagel and A.E. Roth (eds.), Handbook of Experimental Economics. Princeton, NJ: Princeton University Press, pp. 253–348.Google Scholar
  51. Selten, R. (1967). “Die Strategiemethode zur Erforschung des eingeschr¨ ankt rationalen Verhaltens im Rah-men eines Oligopolexperiments. ” In H. Sauermann (ed.), Beiträge zur experimentellen Wirtschaftsforschung. Tübingen: Mohr, pp. 136–168.Google Scholar
  52. Selten, R., Mitzkewitz, M., and Uhlich, G. (1997). “Duopoly Strategies Programmed by Experienced Players. ” Econometrica. 65, 517–555.Google Scholar
  53. Selten, R. and Ockenfels, A. (1998). “An Experimental Solidarity Game. ” Journal of Economic Behavior and Organization. 34, 517–539.Google Scholar
  54. Sherman, S.J., Presson, C.C., and Chassin, L. (1984). “Mechanisms Underlying the False Consensus Ef-fect: The Special Role of Threats to the Self. ” Personality and Social Psychology Bulletin. 10, 127–138.Google Scholar
  55. Singh, R., Choo, W.M., and Poh, L.L. (1998). “In-Group Bias and Fair-Mindedness as Strategies of Self-Presentation in Intergroup Perception. ” Personality and Social Psychology Bulletin. 24, 147–162.Google Scholar
  56. Smith, V.L. and Walker, J.M. (1993). “Monetary Rewards and Decision Costs in Experimental Economics. ” Economic Inquiry. 31, 245–261.Google Scholar
  57. Taylor, S.E. and Brown, J.D. (1988). “Illusion and Well-Being: A Social Psychological Perspective on Mental Health. ” Psychological Bulletin. 103, 193–210.Google Scholar
  58. Wicklund, R.A. and Gollwitzer, P.M. (1981). “Symbolic Self-Completion, Attempted Influence, and Self-Deprecation. ” Basic and Applied Social Psychology. 70, 913–930.Google Scholar
  59. Yang, Ch.L., Weimann, J., and Mitropoulos, A. (1999). “Bargaining Power in Simple Sequential Games. ” Working Paper.Google Scholar
  60. Zajonc, R.B. (1980). “Feeling and Thinking: Preferences Need no Inferences. ” American Psychologist. 35, 151–175.Google Scholar

Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Jeannette Brosig
    • 1
  • Joachim Weimann
    • 1
  • Chun-Lei Yang
    • 2
  1. 1.Faculty of Economics and ManagementOtto-von-Guericke-UniversitätMagdeburgGermany
  2. 2.ISSPAcademia SinicaTaiwan, Republic of China

Personalised recommendations