THE EFFECTS OF RESOURCE SHORTAGE ON DE‐ESCALATION IN A SIMULATED PRICE WAR

A simulated price war between two competing gas stations provided the context to assess the effects on de‐escalation of the subject's financial shortage, the competitor's financial shortage, and a message from the competitor conveying a non‐exploitative intent. Subject shortages encouraged gasoline price increases (de‐escalation) and competitor shortages encouraged price decreases (escalation). Subjects who were suffering a financial shortage rated their competitor as less likely to cooperate and more likely to exploit them than those who were not. Results were discussed in terms of a simplification of Pruitt and Kimmel's (1977) goal‐expectation hypothesis. One possible explanation for our results is that subjects make a comparison of relative strength before choosing either to de‐escalate or escalate.