business bluffing reconsidered imagine that i walk into a car dealership and tell the salesperson that i absolutely cannot pay more than 10 000 for the car that i want and imagine further she tells me that she absolutely cannot sell the car for less than 12 000 assuming that neither one of us is telling the truth we are bluffing about our reservation prices the price above or below which we will no longer be willing to make the transaction this is certainly a common practice and moreover is most likely minimally prudent whether our negotiating adversary is bluffing or not it will always be in our interest to bluff discussions of bluffing in business commonly invoke reservation prices but need not one could misrepresent his position in any number of areas including the financial health of a company poised for merger the authority that has been granted to him by the parties that he represents or even one s enthusiasm about a project the goal of bluffing is quite simple to enhance the strength of one s position during negotiations bluffing has long been a topic of considerable interest to business ethicists 1 on the one hand bluffing seems to bear a strong resemblance to lying and therefore might be thought to be prima facie impermissible on the other many people have the intuition that bluffing is an appropriate and morally permissible negotiating tactic given this tension what is the moral standing of bluffing in business the dominant position has been that it is permissible and work has there fore been done to show why the apparent imper missibility is either mismotivated or illusory two highly influential papers have taken different approaches to securing the moral legitimacy of bluffing the first by albert carr argued that bluffing in business is analogous to bluffing in poker and therefore should not be thought to be impermissible insofar as it is part of the way that the game is played the second by thomas carson presented a more subtle argument wherein the author reconstrued the concept of lying to require an implied warrantability of truth and since business negotiations instantiate a context wherein claims are not warranted to be

tension and trust in international business negotiations american executives negotiating with chinese executives the purpose of the study is to shed light on the antecedents and consequences of tension felt during international business negotiations a total of 176 american and chinese executives participated in simulated international business buyer seller negotiations the negotiations were videotaped and the participants completed questionnaires each participant was also asked to review his her videotaped negotiation rate the tension felt on a videotape review form and briefly describe the antecedents of the tension felt the data collected were then analyzed using first a structural equations approach and then a more exploratory content analysis both chinese and american executives felt tension during the negotiations for the chinese greater levels of tension led to an increased likelihood of agreement but also led to lower levels of interpersonal attraction and in turn lower trust for their american counterparts for the americans tension felt decreased marginally the likelihood of an agreement did not affect interpersonal attraction but did have a direct negative effect on trust a series of other cultural differences are also reported the measure of tension felt developed in the study appears to be useful methodologically theoretically and practically

price pass through and the minimum wage this paper tests a textbook consequence of competitive markets that an industry wide increase in the price of labor is passed on to consumers through an increase in prices using several data sources on restaurant prices i explore the price impact of minimum wage hikes in canada and the united states particular attention is paid to the timing of these price responses to gauge the stickiness of minimum wage cost shocks i find that restaurant prices generally rise with changes in the wage bill and that this response is concentrated in the quarter surrounding the month during which the legislation is enacted

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

minimum wage and real wage inequality evidence from pass through to retail prices this paper considers the impact of the minimum wage on both labor and product markets using detailed store level scanner data i provide empirical evidence that a 10 increase in the minimum wage r

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

tropic trust versus nordic trust experimental evidence from tanzania and sweden undergraduates in tanzania and sweden participated in one trust game one dictator game and answered a standard set of survey questions relating to trust in both countries we detected a strong and significant relation between dictator donations and proportions returned in trust games indicating that unconditional distribution preferences matter in trust game behaviour in sweden incentive compatible evaluations of unrevealed dictator donations significantly predicted the amount sent in trust games the predictive power of survey trust questions differed between countries a plausible relation between survey trust and trust behaviour was found in sweden but not in tanzania

negotiating in the united states and hong kong we propose that cultural values self enhancement self transcendences conservatism and openness to change provide a social environment where some negotiation strategies are selected to survive over others these selected negotiation strategies become normative results from a negotiation simulation in the united states and hong kong indicate that u s negotiators are more likely to subscribe to self interest and joint problems solving norms and hong kong chinese negotiators are more likely to subscribe to an equality norm further u s negotiators report more satisfaction when they maximize joint gain and hong kong chinese negotiators are happier when they achieve outcome parity the reported norms and outcome evaluations are consistent with the value profiles of the two cultures the implications of these cultural differences are discussed in terms of expanding u s based negotiation theory

conflict management style accounting for cross national differences a problem in joint ventures between u s and asian firms is that cultural differences impede the smooth resolution of conflicts between managers in a survey of young managers in the u s china philippines and india we find support for two hypotheses about cultural differences in conflict style and the cultural values that account for these differences chinese managers rely more on an avoiding style because of their relatively high value on conformity and tradition u s managers rely more on a competing style because of their relatively high value on individual achievement

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

egalitarianism and competitiveness competition is a cornerstone of economic life some environments are however more competitive than others and individuals are often confronted with the decision whether to self select into a competitive environment an important example is occupational choice a self employed lawyer is in constant competition for clients whereas a lawyer working as a civil servant in a public authority is not likewise some people vigorously compete for promo tion to better paid jobs associated with a high prestige while others don t understanding who self selects into competitive environments and who shies away from them is thus important in this paper we test the hypothesis that individu als with a preference for egalitarian outcomes are more reluctant to self select into competitive environments our hypothesis is based on i the observation that payoff inequalities among winners and losers arise as a natural by product of competition and ii the empirical literature showing that a nonnegligible share of children and adults is willing to incur costs to reduce earnings inequalities see e g christopher dawes et al 2007 ernst fehr helen bernhard and bettina rockenbach 2008 we analyze data from several economic experiments implemented in a household survey study with mothers of preschool children we

can first mover and early mover advantages be sustained in an industry with low barriers to entry imitation this study examines whether first mover and early mover advantages can be sustained in an industry where the barriers to entry are generally low and new product innovations can be easily imitated namely the money market mutual fund industry using a simultaneous equation supply and demand model of panel data from a variety of money market fund product categories the study finds that first movers and early movers enjoy both a highly sustainable pricing advantage and a moderately sustainable market share advantage these counterintuitive results are interpreted in terms of the structural characteristics of demand in the industry implications of these results for the ongoing debate between the sustainability and hypercompetition perspectives are discussed 1998 john wiley sons ltd

u s china trade negotiations practices procedures and outcomes this study sought to examine and identify 1 the mechanics of u s china trade negotiations 2 how a company prepares for such negotiations 3 the factors that contribute to the success or failure of such negotiations and 4 the outcomes of such negotiations data pertaining to these characteristics were collected from 138 u s firms engaged in china trade relationships between certain variables such as extent of preparation for the negotiations type of programs used and incidences of success were examined based on these results implications for management were drawn

misrepresentation and expectations of misrepresentation in an ethical dilemma the role of incentives and temptation an investigation of ethical decision making in a negotiation context revealed that focal actors incentives influenced not only their misrepresentation but also their expectations of their opponen

cross cultural interaction the international comparison fallacy international management studies have been based primarily on the comparison of managerial behavior in countries around the world often these studies have implied that business people behave similarly with their domestic colleagues as with their foreign counterparts in questioning that assumption this study tests whether intra cultural behavior accurately predicts cross cultural behavior using a negotiation simulation and a sample of 462 japanese american and canadian businesspeople behaviors in cross cultural negotiations were found to differ in some important ways from those in intra cultural negotiations

coordination and learning behavior in large groups with asymmetric players we study a class of large group noncooperative iterated market entry games with complete information binary choices and asymmetric players in which the incentive of each player to enter the market decreases the larger the number of entrants experimental results from two different studies show remarkable coordination on the aggregate level which is accounted for successfully by the nash equilibrium solution the equilibrium solution is less successful in accounting for the differences among types of players with differential entry costs or differences among players of the same type rather the behavioral patterns observed on the aggregate level are accounted for by a reinforcement based learning model postulating an initial distribution of individual cutoff points these cutoff points are assumed to change over time at a decreasing rate as a joint function of the decision and outcome of the preceding period journal of economic literature classification numbers c7 d5 d8 2002 elsevier science usa

insecurity of property rights and matching in the tenancy market this paper analyzes the functioning of land rental markets in the dominican republic using a new data set collected specifically to characterize the entire market we analyze the choice of the landlords and the tenants in the search for the optimal partner we show how insecure property rights leads to segmentation in the tenancy markets along socio economic group and hence severely limits access to land for the rural poor

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

the influence of culture on the process of business negotiations an exploratory study the processes of business negotiations in three countries the united states japan and brazil are compared and contrasted three dyads from each country were videotaped during a buyer seller negotiation simulation both verbal behaviors and nonverbal behaviors were observed and recorded observed differences provide the basis for hypothesized differences which might be tested in future work

land and power theory and evidence from chile many employment relationships concede rents to workers depending on the political institutions the presence of such rents allows employers to use the threat of withdrawing them to control their workers political behavior such as their votes in the absence of secret ballot we examine the effects of the introduction of the secret ballot in chile in 1958 on voting behavior before the reforms localities with more pervasive patron client relationships tended to exhibit a much stronger support for the right wing parties traditionally associ ated with the landed oligarchy after the reform however this difference across localities completely disappeared jel d72 n46 o13 o15 o17

ethical and unethical bargaining tactics an empirical study competitive negotiators frequently use tactics which others view as unethical in that these tactics either violate standards of truth telling or violate the perceived rules of negotiation this paper sought to determine how business students viewed a number of marginally ethical negotiating tactics and to determine the underlying factor structure of these tactics the factor analysis of these tactics revealed five clear factors which were highly similar across the two samples and which parallel to a moderate degree categories of tactics proposed by earlier theory data from one sample also permitted comparisons of the appropriateness of certain tactics across gender nationality ethnic origin and perception of one s negotiating style

signaling strategies in competitive interaction building reputations and hiding the truth abstract the authors develop a conceptual framework of how managers interpret competitors signals over time in various market contexts from the framework the authors generate hypotheses about the relative effectiveness of signaling strategies used by firms in different market contexts the authors conducted two empirical studies involving a repeated entry pricing game to test the hypotheses the results of study 1 show that the entrant s perceptions of the aggressiveness of the incumbent depend on the focus and strength of the incumbent s signals the results of study 2 show that the strength of the entrant s responses to the incumbent s signals depends on the incumbent s use of bluffs and the cost of information about the factors driving the incumbent s signals the implications of these findings for how firms should signal to achieve such strategic objectives as revealing or concealing information developing a desired reputation and influencing competitors responses over time are discussed the au

using patents to mislead rivals firms claim they do not rely heavily on patents yet they patent as indicated by the large number of patents that are granted this paper offers a possible resolution to this puzzle it takes a simplified version of a duopoly innovation race and studies the patenting decision of an innovator who has private information about the improvability of her innovation it is shown that a firm may use the patenting decision to mislead her rival under symmetric information research can be stimulated but not disclosed however under asymmetric information disclosure is more likely even though research incentive may be weakened jel classification 031 l1 de l utilisation des brevets pour leurrer les concurrents les entreprises innovatrices pretendent ne pas compter sur leurs brevets afin de s approprier les rendements de leurs innovations cependant les firmes brevetent comme l atteste le nombre de brevets deposes nous proposons une explication a cette apparente contradiction dans un modele simplifie de course a l innovation a deux firmes nous etudions la decision de breveter d un innovateur qui a une information privee sur l ameliorabilite de son innovation nous montrons que la decision de breveter peut etre utilisee afin de leurrer la firme concurrente lorsque les deux firmes partagent la meme information bien que la recherche puisse etre stimulee nous montrons qu elle reste non brevetee et donc non divulguee cependant lorsque l information est asymmetrique l innovateur brevete plus souvent son innovation mais son concurrent a alors moins d incitation a entreprendre la recherche

how do diversity of opinion and information asymmetry affect acquirer returns we examine the theoretical predictions that link acquirer returns to diversity of opinion and information asymmetry theory suggests that acquirer abnormal returns should be negatively related to information asymmetry and diversity of opinion proxies for equity offers but not cash offers we find that this is the case and that more strikingly there is no difference in abnormal returns between cash offers for public firms equity offers for public firms and equity offers for private firms after controlling for one of these proxies idiosyncratic volatility jel g31 g32 g34 this article examines whether variables suggested by diversity of opinion models and information asymmetry models are helpful in understanding the cross sectional variation in acquirer announcement returns using a sample of pure equity offers and pure cash offers for public and private firmsfrom1980to2002 wedocumentthatthesevariables theuncertainty proxies explain a significant fraction of the cross sectional variation in acquirer announcement returns perhaps most strikingly after controlling for the uncertainty proxies there is no difference in abnormal returns between cash offers for public firms equity offers for public firms and equity offers for private firms using two proxies for diversity of opinion employed previously in the literature the standard deviation of analyst forecasts and breadth of ownership we show that bidder abnormal returns for acquisitions of

learning information and sorting in market entry games theory and evidence previous data from experiments on market entry games n player games where each player faces a choice between entering a market and staying out appear inconsistent with either mixed or pure nash equilibria here we show that in this class of game learning theory predicts sorting that is in the long run agents play a pure strategy equilibrium with some agents permanently in the market and some permanently out we conduct experiments with a larger number of repetitions than in previous work in order to test this prediction we find that when subjects are given minimal information only after close to 100 periods do subjects begin to approach equilibrium in contrast with full information subjects learn to play a pure strategy equilibrium relatively quickly however the information which permits rapid convergence revelation of the individual play of all opponents

the effects of cultural adaptation on business relationships americans selling to japanese and thais a 2 4 culture of participants degrees of cultural adaptation experimental design with 145 thai and 101 japanese professionals is used to investigate the effect of cultural adaptation on attraction and outcomes when americans adapt to japanese and thais this study extends the research of francis 1991 the curvilinear relationship between adaptation and attraction found in francis is not replicated for thais the relationship appears monotonic positive for japanese it reaches a plateau beyond moderate adaptation

the role of affect in cross cultural negotiations this paper presents a model of cross cultural negotiations which describes how the affect negotiators experience during negotiations influences the character of the negotiation process and its outcomes three categories of determinants of negotiator affect are proposed individual differences cross cultural differences and contextual factors the ways in which negotiator affect influences information processing during negotiations are then described it is suggested that the influence of affect through substantive information processing may lead to either positive or negative spirals in negotiations influencing the ability of negotiators to reach an integrative solution finally the ways in which negotiators can break out of destructive negative spirals by engaging in motivated rather than substantive information processing are discussed

cultural differences in conducting intra and inter cultural negotiations a sino canadian comparison a study on conflict resolution strategies of canadian and chinese peoples republic of china executives was conducted responses to two types of joint project conflicts task related and person related with potential partners from their own culture or from the other culture were examined neither group of executives altered its strategy when negotiating across cultures chinese executives were more likely to avoid conflicts but recommended more negative strategies discontinue negotiation withdraw negotiation when conflict emerged person related conflicts were found to generate more negative responses than task related conflicts especially for chinese executives both canadian and chinese executives preferred to negotiate with canadians than with chinese

land division a lab in the field bargaining experiment abstract we design a framed bargaining experiment to explore how farmers allocate inherited land in the experiment two players with heterogeneous productivity inherit a land plot yielding a risky production and some tokens to bargain over a land allocation we conduct this experiment in colombia with 256 participants from rural municipalities and 120 undergraduate students although the efficient the non cooperative and the cooperative solutions of this game predict that the most productive player accrues most of the land we find that 75 of the bargaining interactions yield egalitarian but inefficient land divisions we implemented a treatment variation in which a costly disagreement is the only outcome leading to land equality the single disagreement observed in this treatment weakens the support for preferences for egalitarian outcomes as the driver of inefficient allocations we discuss alternative explanations based on the salience of equality heuristics over valuation of land and sequential cooperative bargaining

the long path to the ibm mexico agreement an analysis of the microcomputer investment negotiations 1983 86 studies of negotiation have proliferated but few especially in international business have systematically detailed the complexity of negotiations in situ this paper describes and explains the widely publicized controversial talks between ibm and the mexican government that followed ibm s proposal to established a 100 owned personal computer assembly plant near guadalajara

brazilian japanese and american business negotiations the determinants of the outcomes of business negotiations in 3 cultures are investigated in a laboratory experiment the outcomes of negotiations between japanese businessmen result primarily from a situational constraint the role of the negotiator buyer or seller representational problem solving oriented bargaining strategies a measure of the process of the interaction is the most important variable in american negotiations in negotiations between brazilian business people deceptive bargaining strategies also a process measure is the key variable affecting outcomes

trans specialization understanding in international technology alliances the influence of cultural distance in the information age the firm s performance hinges on combining partners specialist knowledge to achieve value co creation combining knowledge from different specialties could be a costly process in the international technology alliances itas context we argue that the combination of different specializations requires the development of trans specialization understanding tsu instead of the internalization of partners specialist knowledge this article examines the extent to which inter firm governance in itas shapes tsu and whether the development of tsu is endangered by cultural distance we hypothesize that relational governance product modularity and cultural distance influence tsu development which in turn influences firm performance we collected data from 110 non equity itas between software and hardware firms participating in the mobile device sector we analyzed the data using partial least squares path modeling our findings suggest that tsu largely depends on product modularity and relational governance in alliances however while cultural distance negatively moderates the path from relational governance to tsu it has no effect on the relationship between product modularity and tsu based on this we conclude that product modularity can substitute for relational governance when strong relational norms are not well developed in international alliances thus cultural distance does not invariably amount to a liability in itas

improving generalizations from multi country comparisons in international business research in this paper we address the problem of questionable generalizations from comparing small numbers of countries in international business ib research we illustrate the misleading results that can arise from sparse samples whether the relationship between national level variables is strong economic development and corruption or weak population density and trust we show that 35 of recent international comparisons in leading ib journals examined just two or three countries and present an exploratory analysis of 123 variables that reveals typical correlations across countries to be rather moderate average r 0 24 to help interpret extant study findings we provide formulas and graphs based on bayesian analysis and introduce a method of combining results from multiple international comparisons we also describe methods for designing studies to give stronger evidence of relationships between variables our results suggest that a minimum of 7 10 countries may support credible international generalizations but only when overall trends are very strong a key strategy for improving ib generalizations is to use larger samples of countries because research based on common sample and effect sizes may lead to generalizations that the findings do not justify

timing order and durability of new product advantages with imitation this research examined the effects of timing order and the durability of first mover advantages by analyzing the stock market reactions to new product introductions and imitations the major findings are that both timing and order of moves are important and that rival reactions undermine the durability of first mover advantages more specifically 1 early and fast movers achieve greater gains than late and slow movers and 2 first movers suffer at the time of new product imitations copyright 2000 john wiley sons ltd

competitive bluffing an examination of a common practice and its relationship with performance bluffing a common and consequential form of competitive behavior has been comparably ignored in the management literature even though misleading one s rivals is suggested to be an advantageous skill in a multifaceted and highly competitive environment to address this deficiency and advance scholarship on competitive dynamics our study investigates the moral reasoning behind competitive bluffing and using a simulated market entry game examines the performance effects of bluffing findings suggest that decision makers views on the ethicality of bluffing competitors differ from their beliefs on the ethicality of misleading other organizational stakeholders analysis also indicates that decision makers who view competitor bluffing as more ethical less unethical are more willing to engage in competitive bluffing finally while bluffing is often thought to be an effective business practice results show that in the context of repeated interaction bluffing is not conducive to high levels of performance and in fact can have undesirable consequences

the pass through of minimum wages into us retail prices evidence from supermarket scanner data this paper estimates the pass through of minimum wage increases into the prices of us grocery and drug stores we use high frequency scanner data and leverage a large number of state level increase

understanding the domain of cross national buyer seller interactions cross national face to face selling has thus far received very little scholarly treatment in marketing literature with few notable exceptions most existing research in this area has been fragmentary and opportunistic these problems are largely because of the lack of a broad generalizable framework within which to conceptualize and execute research studies in offering such a conceptual framework this article looks at buyer seller interactions from a communication perspective

signals and choices in a competitive interaction the role of moves and messages this study examines the effect of signals from a competitor on the decisions of managers in a situation of strategic interdependence the context is a multi period pricing simulation and the payoffs are structured in accordance with a prisoner s dilemma the signals consist of messages from the competitor and observations of the pricing decisions made by the competitor the managers responses to particular types of signals and particular combinations of moves and messages change over the course of the simulation suggestions for future research on competitive signaling are offered

estimating time preferences from convex budgets experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision making such high rates are often attributed to present biased discounting a well known bias of standard measurements is the assumption of linear consumption utility attempting to correct this bias using measures of risk aversion to identify concavity researchers find reasonable discounting but at the cost of exceptionally high utility function curvature we present a new methodology for identifying time preferences both discounting and curvature from simple allocation decisions we find reasonable levels of both discounting and curvature and surprisingly dynamically consistent time preferences jel c91 d12 d81 understanding and estimating time preferences is obviously of great importance to economists marketers and policy makers consumers decide how much to invest in savings education real estate and life insurance how much to diet exercise and smoke whether to marry when to have children and what to leave in their wills while there has been substantial research estimating time preferences using aggregate consumption data 1 the bulk of the effort has occurred in laboratory environments 2 among the many laboratory techniques employed recent studies have favored multiple price lists mpl with monetary payments 3 with mpls individuals are asked multiple times to choose between smaller payment amounts closer to the present and larger amounts further into the future the interest rate increases monotonically in a price list such that the point where an individual switches from preferring sooner payments to later payments carries interval

using privileged information to manipulate markets insiders gurus and credibility access to private information is shown to generate both the incentives and the ability to manipulate asset markets through strategically distorted announcements the fact that privileged information is noisy interferes with the public s attempts to learn whether such announcements are honest it allows opportunistic individuals to manipulate prices repeatedly without ever being fully found out this leads us to extend sobel s 1985 model of strategic communication to the case of noisy private signals our results show that when truthfulness is not easily verifiable restrictions on trading by insiders may be needed to preserve the integrity of information embodied in prices