Negotiation Behavior and Outcomes: Empirical Evidence and Theoretical and Issues

D.M.GIMARA MadhushaniTC/is/2011/ms/13Trincomalee Campus Eatern University Sri Lanka

contents

. Introduction definition of negotiation Measures of negotiation behavior Economic measures Social-psychological measures Theoretical approaches and models Individual differences Motivational cognitive models conclusions

NEGOTIATIONNegotiation is a pervasive and important form of social interaction.

Negotiation occurs:in business academic environments in informal social interactions.

Interdisciplinary history of the study of negotiation in the fields of :

psychologyeconomics industrial relationsorganization

behavior sociologyLaw.

The theoretical goal is to

predict the processes and

outcomes of negotiation.

The practical or applied

goal is to help people

negotiate more effectively.

The fundamental and enduring questions raised by the growing body of research on negotiation behavior include the:

What factors lead to negotiation success or failure?

Which theoretical perspective provides the best account of negotiation behavior?

What empirical findings must a theoretical approach to negotiation explain?

VARIETY OF THEORETICAL ANALYSES OF NEGOTIATION BEHAVIOR

Normative approach-on axioms of individual rationality -prescribe how people should behave in competitive situations

Descriptive approachexamine:

-the influence of individual characteristics-motivations -cognitive processes on judgment-Behavior-Outcomes in negotiation

DEFINITION OF NEGOTIATION

Negotiation is the process whereby people attempt to settle what each shall give and take or perform and receive in a transaction between them.

-(Rubin & Brown, 1975)-

CHARACTERISTICS OF NEGOTIATION SITUATION

People believe that they have conflicting interestsCommunication is possibleIntermediate solutions or compromises are possibleParties may make provisional offers and counteroffersOffers and proposals do not determine outcomes until they are accepted by both parties.

BASIC FEATURES OF NEGOTIATION

the negotiating parties

their interests

the negotiation process

the negotiation outcome

The structure of the bargaining situation is determined by the degree of conflict between parties' interests.

Pure conflict situations are known as fixed-sum or purely distributive negotiations.

Sometimes parties' interests are neither completely opposed nor purely compatible. Such situations are known as variable-sum or integrative negotiations.

NEGOTIATION PROCESSES INCLUDE:Behavioral enactments of bargaining strategies. communication between bargainers

NEGOTIATION PROCESS

Interaction that occurs between parties before the outcome.

The negotiation outcome is the product of the bargaining situation.

Negotiations may end in impasse or in mutual agreement. A negotiation outcome is said to be efficient or pareto optimal: does not exist some other feasible solution or set of solutions that would improve the utility of one or both parties while not hurting either party

MEASURES OF NEGOTIATION BEHAVIOR

Economic measuresSocial psychological measures

ECONOMIC MEASURES

Focus on the outcomes or products of the negotiation Derived from axioms of individual rationality Normative analyses of negotiation behavior

Measures of performance are specified by normative bargaining models

Mutual Agreement

Creating Resources: Integrative BargainingClaiming Resources: Distributive Bargaining

Mutual Agreement

Negotiators should reach a mutual agreement if the alternative is worse than what they could achieve through agreement with the other party.Negotiators should reach an agreement with the other party if it is in both their interests to do so. The utility of a mutual agreement is determined by the zone of agreement defined by negotiators' reservation prices.

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MUTUAL AGREEM

ENT

Creating Resources: Integrative Bargaining

negotiators' interests are not purely competitive, negotiation involves not just dividing resources (distributive bargaining) but identifying additional value, benefits, and resources (integrative bargaining).

The economic definition of integrative bargaining is precise and refers to whether negotiated outcomes are efficient, or pareto optimal.

several strategies for reaching integrative

agreements, including logrolling, in which negotiators make

trade-offs between issues so that each party gets all or

most of his or her preferred outcome on important issues.

Thompson and Hastie (in press) noted that negotiators may reach integrative agreements by identifying compatible issues. Compatible issues are issues for which negotiators have similar preferences.

Claiming resources: distributive bargaining

The distributive component reflects the primary motivation of negotiators: to maximize their utility.

A fundamental task for the negotiator is to divide resources in such a manner that he or she keeps most of the bargaining surplus.

The bargaining surplus is the difference between one's reservation price and the final settlement.

SOCIAL-PSYCHOLOGICAL MEASURES

Social-psychological measures of negotiation performance are based on concepts of social perception.

The elements of social perception include most aspects of perceivers' social worlds: people, their behaviors, and contexts or situations.

The most important elements of social perception in negotiation are:

negotiators' perceptions of the bargaining situation the other party or bargaining opponent themselves

People actively perceive their social world by :

selecting categorizing interpreting inferring

information

For example: Negotiators do not know what the interests of the other party are but instead make inferences about their opponent:

The perception process is constructive and selective.

perception is influenced by the salience of information and the order in which information is presented, as well as by perceivers' expectations, knowledge, and experience. people's perceptions influence their behavior.

Perceptions of the Negotiation Situation

Judgments that people make about the bargaining process and outcome

Examples:Negotiators' judgments of the fairness of

the procedures outcomes of negotiation and expectations and perceived norms

concerning appropriate behavior

• influenced by: their implicit theories of

bargaining Conflict Negotiation

Also include their views of the structure of the bargaining task:

purely competitive cooperative integrative

Pinkley noted that negotiators' perceptions of conflict are multidimensional and may be characterized by three bipolar dimensions, or "conflict frames":

relationship-taskemotional-intellectual compromise-win

Perceptions of the Other Party

Include: many of the processes and elements associated with the more general process of person perception and impression formation.

An important and powerful aspect of person perception is evaluation or liking

Trait inferences that negotiators make about the other party's

intelligence sociability expertise skill ability cooperativeness competitiveness.

the attributions that negotiators make to explain the behavior of their bargaining opponent

the predictions they make about the opponent's future behavior

Perceptions of the other party are hypothesized

Perceptions of the Self

Include: many of the dimensions relevant to

perceptions of the bargaining opponent, such as skill, cooperativeness, fairness.

negotiators' judgments of their own interests, values, goals, and risk preferences

social comparisons between the self and the other party

The hypothesized mental structures used to represent self-perceptions are self-schemata

THEORETICAL APPROACHES AND MODELS

Individual differences

Motivational

Cognitive models

Individual Differences Approach

Identify stable characteristics of people that reliably affect their bargaining behavior and performance.

Collection of disparate hypotheses, predictions, and low-level theoretical statements

General classes of theoretical models characterize the individual difference approach:

Direct-effect models

Contingency models

Direct-effect models• Individual differences directly influence social behavior. e.g.:

The hypothesis that women perceive conflict differently than do men.

Individual differences in the negotiation literature include:

relationship orientation (Machiavellianism; cooperative-competitive orientation)

cognitive ability (cognitive complexity; perspective-taking ability)

gender/ sex role orientation

Contingency Model

negotiation behavior is determined by: specific characteristics of persons particular features of the situation

e.g.:Machiavellian bargainer will take advantage of a non-Machiavellian bargaining opponent when the interaction occurs face to face, but not when a barrier obstructs their visual contact.

The impact of individual differences on economic and social-psychological

measures of performanceEconomic Criteria

Mutual AgreementFry (1985) proposed a contingency model

relationship between negotiator Machiavellianism and visual accessibility.

low- high pairs negotiating face to face would be most likely to fail to reach agreement

Joint Outcomes

Cognitive ability, Integrative bargaining situations often require problem-solving behaviors to maximize joint gain.

cognitively complex negotiators entertain more alternative conceptions of bargaining situations and gather and integrate more information during bargaining.

Gender: 

• Other researchers have hypothesized that the sex

composition of the dyad may affect integrative

bargaining outcomes.

 e.g.: Men seek to maximize their own gains,

whereas women respond to the interpersonal aspect of the situation. However, there was no support for this prediction.

 

Individual Outcomes

Machiavellianism, In general, Machiavellian bargainers claim more resources than do non-Machiavellian bargainers .

Trait Machiavellianism may not directly influence negotiation behavior but may instead interact with situational and task constraints to influence performance.

Cognitive ability, increase negotiators' ability to claim resources

Negotiators with high perspective-taking ability earned higher outcomes than did those with low perspective-taking ability.

Social-Psychological Measures .

Investigators of individual differences on social-psychological

measures have primarily explored the direct effects of gender

and sex role orientation on perceptions.

Perceptions of the Bargaining Situation

Men are more or less effective negotiators than are women, men

may perceive conflict differently than do women. In general,

men are more concerned with winning and maximizing their

outcomes, whereas women are more concerned with

maintaining the relationship.

For example:

Pinkley found that women were more likely than men to interpret a conflict situation in relationship terms, whereas men were more concerned with the exchange of resources.

Perceptions of the Opponent

.

Women tend to perceive their opponents as

similar to themselves, whereas men perceive

themselves as fundamentally different from their

opponents

Perceptions of the Self

Women engage in more self-derogation during

negotiation than do men. Men perceive

themselves as more powerful than do women

. Motivational ApproachesExamine the influence of aspirations and goals on

bargaining behavior and outcomes.

Two general theoretical approaches have developed within this broad area.

1.aspiration is a continuous, unidimensional concept ranging from low to high .

2.bargaining goals are not unidimensional and that the maximization of gain is not the primary goal of bargaining

The impact of individual differences on economic and social-psychological measures of

performanceEconomic Criteria

Mutual Agreement A key prediction of aspiration-level models is that

high aspirations block opportunities for mutual agreement and increase the likelihood of an impasse.

Two separate lines of evidence support this prediction: studies of constituency pressure explicit goal setting

Constituency pressure, negotiators who

represent a larger group or constituency feel

accountable to their constituency and pressured

to meet their goals and, consequently, adopt

higher aspiration levels and remain firmer in

their aspirations than do negotiators who are

not under constituency pressure.

Explicit goal setting, manipulate negotiators' aspirations by providing them with a specific goal or target value to achieve.

Most of this research has been conducted using the experimental bargaining market paradigm .

Specific, challenging, or demanding goals complete fewer successful transactions than do those not given challenging goals.

High aspirations have more unsuccessful transactions than do negotiators with lower aspirations.

Dual Concern Model

suggests that the relationship between aspiration and bargaining outcomes is more complex and requires consideration of negotiators' concern for the other party in addition to their own level of aspiration.

integrative out- comes are reached through joint problem-solving.

Joint Outcomes Explicit goal setting is derived from aspiration-

level theories. In general, higher aspirations are predicted to lead to greater joint profit.

Individual Outcomes

Aspirations also improve distributive bargaining behavior. Bargainers who have specific, explicit goals achieve higher individual outcomes than do bargainers not given explicit goals to achieve.

Social Psychological Measures

constituency pressure view bargaining situations as more competitive and less productive than do bargainers who do not represent a constituency or at least do not feel pressured to maximize profits for a constituency.

Perceptions of the Other Party Negotiators under pressure from their

constituencies to maximize gains perceived themselves as more dissimilar to their opponents than did negotiators who were not under pressure to maximize gains.

Cognitive Approach

The basis of the cognitive approach is information-processing theory.

Information is typically represented as ,

A list of features

concepts are represented as nodes labeled with a word

or a phrase,

Relations between idea nodes are symbolized

theoretically as links in a network.

Economic Criteria

Mutual Agreement Two factors affect risk aversion:

The framing of negotiation payoffs

Negotiators' judgments of the probability that

their offer would be selected by a neutral third

party under final offer arbitration.

Joint Outcomes

Framing of negotiation payoffs

a positive frame (who view negotiation in terms of maximizing gain) should be risk averse, whereas those with a negative frame (who view negotiation in terms of minimizing loss) should be risk seeking.

Judgment accuracy

Misperceptions of the other party are a primary cause of suboptimal outcomes in negotiation.

Two critical judgments that negotiators make about the other party's interests:

compatibility judgments determine whether all or only some of their

interests are incompatible with those of the other party.

Priority judgments negotiators' perceptions of the other party's

evaluation of the relative importance of the to-be-negotiated issues.

Social Psychological Criteria Perceptions of the Bargaining Situation

Negotiators bring a fixed-pie, or win-lose perception to negotiation.

Perceptions of the Opponent

Negotiators tend to perceive the other party as completely dissimilar to themselves.

Perceptions of the Self Self-serving evaluations, Negotiators make

self-serving attributions and evaluations in bargaining.

Example, negotiators who are unable to reach mutually acceptable agreements blame their opponent for the failure, whereas they usually attribute success to themselves.

conclusionTheoretical IssuesTheoretical approaches are necessarily

contradictory.The theory should be accessible to objective,

economic analysis;Explain the perceptual experience of

negotiators and their judgment processes.A theory should explain the relationships

between judgment and behavior in negotiation

In addition to explaining the correspondences between judgment and behavior, the theory should explain discrepancies.

Motivation and goals are essential ingredients in a theory of negotiation

Empirical Issues

Economic measures of performance have been used more extensively than social-psychological measures.Why it is important to include both measures in research programs:

negotiators typically do not have the information necessary to make objective judgments of the bargaining situation; their understanding of the bargaining situation is based on their perceptions.

It is useful to compare negotiators' perceptions with objective measures

Negotiators' perceptions are important to examine because they influence behavior in negotiation.