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Non-linear Preference Functions and Negotiated Outcomes

Northcraft1, Preston, Neale

  • 1Department of Business Administration, Institute of Labor and Industrial Relations, University of Illinois

Organizational Behavior and Human Decision Processes
|December 16, 1998
PubMed
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Negotiator preferences significantly impact settlement outcomes, with prior relationships also playing a key role. These factors influence negotiation results beyond communication effectiveness.

Area of Science:

  • Behavioral Economics
  • Social Psychology
  • Game Theory

Background:

  • Negotiated settlements are influenced by various factors, including negotiator preferences and relationships.
  • Understanding how preference shapes (linear, increasing, decreasing marginal utility) affects outcomes is crucial.
  • The role of prior relationships (friends vs. strangers) in moderating these effects warrants investigation.

Purpose of the Study:

  • To investigate the impact of non-linear preferences on negotiated settlement outcomes.
  • To examine whether the prior relationship between negotiators moderates the effect of preferences on outcomes.
  • To determine if communication effectiveness mediates the relationship between prior relationship and negotiation outcomes.

Main Methods:

  • Buyer/seller negotiation role-play simulation.

Related Experiment Videos

  • Manipulation of negotiator preference shapes (linear, increasing, decreasing marginal utility).
  • Assessment of prior relationship status (friends vs. strangers).
  • Main Results:

    • A significant main effect of negotiator preferences on negotiated outcomes was observed.
    • The prior relationship between negotiators significantly moderated the impact of preferences on outcomes.
    • Communication effectiveness did not account for the moderating role of the prior relationship.

    Conclusions:

    • Negotiator preferences are a primary driver of settlement outcomes.
    • Prior relationships introduce a moderating effect on preference-outcome relationships, independent of communication.
    • Findings offer insights for negotiation theory and practical strategies.