Driving a hard bargain is a balancing act: how social preferences constrain the negotiation process

We investigate the haggling process in bargaining. Using an experimental bargaining game, we find that a first offer has significant impact on outcome even if it is costless to reject. First offers convey information player’s reservation value induced by his social preferences. They are most often accepted when they not above equal split. However, which request much more than split induce punishing counter-offers. The therefore critically influenced balance of toughness and kindness signalled through made phase.