Locus of control in reward and punishment decisions

The authors use a laboratory experiment to analyze the relationship between locus of control (LOC) and the behavior of a responding party in an asymmetric bargaining setting. The authors find that the availability of reward and punishment options to responders in bilateral ultimatum bargaining affects the behavior differently depending on their LOC type. Internal subjects are more likely to accept an offer when both reward and punishment options are available upon acceptance, therefore allowing them the largest range of possible payoff adjustments. Internal subjects are more likely to reward (and reward by larger amounts) when both options are available and are more likely to punish (and punish by larger amounts) when only the punishment option is available. The results suggest that the availability of more postacceptance instruments to affect payoffs, and thus a perception of greater control, promotes the acceptance decision of internal subjects.