negotiation behavior and outcomes: empirical evidence and

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Psychological Bulletin 1990, Vol. 108, No. 3,515-532 Copyright 1990 by the American Psychological Association, Inc. 0033-2909/90/$00.75 Negotiation Behavior and Outcomes: Empirical Evidence and Theoretical Issues Leigh Thompson University of Washington This article examines the ability of the individual differences, motivational, and cognitive ap- proaches of negotiation to account for empirical research on dyadic negotiation. Investigators have typically focused on objective, economic measures of performance. However, social-psychological measures are important because negotiators often do not have the information necessary to make accurate judgments of the bargaining situation. Negotiators' judgments are biased, and biases are associated with inefficient performance. Personality and individual differences appear to play a minimal role in determining bargaining behavior; their impact may be dampened by several factors, such as homogeneity of subject samples, situational constraints, and self-selection pro- cesses. Motivational and cognitive models provide compelling accounts of negotiation behavior. A psychological theory of negotiation should begin at the level of the individual negotiator and should integrate features of motivational and cognitive models. Negotiation is a pervasive and important form of social inter- action. Negotiation is necessary whenever conflict erupts and there are no fixed or established rules or procedures to resolve conflict and whenever people want to search for agreement without resorting to aggression or open fighting (Lewicki & Litterer, 1985). Negotiation occurs in business and academic environments and in informal social interactions such as decid- ing with a friend or spouse where to dine or vacation. Clearly, negotiation is essential for anyone who must interact with other people to accomplish their objectives. There is broad interest in the study of negotiation behavior. This interest is evident in the interdisciplinary history of the study of negotiation in the fields of psychology, economics, industrial relations, organization behavior, sociology, and law. The theoretical goal is to predict the processes and outcomes of negotiation. The practical or applied goal is to help people nego- tiate more effectively (Bazerman, 1986; Raiffa, 1982). The fun- damental and enduring questions raised by the growing body of research on negotiation behavior include the following: 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 negoti- ation explain? The purpose of this article is to address these theoretical and empirical issues. A variety of theoretical analyses of negotiation behavior have been developed. An important theoretical distinction is that between normative and descriptive approaches (Neale & Northcraft, in press; Raiffa, 1982). Normative models are based on axioms of individual rationality (cf. von Neumann & I thank Max Bazerman and Reid Hastie for helpful comments on drafts of this article. Correspondence concerning this article should be addressed to Leigh Thompson, Department of Psychology, University of Wash- ington, Seattle, Washington 98195, or by bitnet to Ithomp- son@max .acs.washington.edu. Morgenstern, 1947) and prescribe how people should behave in competitive situations (Cross, 1965; Harsanyi, 1956; Nash, 1950,1953). Normative models have largely been the province of economists and game theorists (cf. Cross, 1965; Harsanyi, 1956; Nash, 1950). As Raiffa (1982) stated, "Game theorists. . . examine what ultrasmart, impeccably rational, superpeople should do in competitive, interactive situations. They are not interested in the way erring folks like you and me actually be- have, but in how we should behave if we were smarter, thought harder, were more consistent, were all knowing" (p. 21). Nor- mative models have advanced the understanding of conflict behavior by providing compelling analyses of optimal or ratio- nal behavior in competitive situations. In addition to prescribing how negotiators should behave, some economic models were also intended to describe the ac- tual behavior of negotiators (Nash, 1950). However, empirical observation indicates that normative models do not adequately describe the behavior of most people in bargaining situations (Neale & Bazerman, 1985a; Northcraft & Neale, in press; Thompson & Hastie, in press). Specifically, bargainers do not behave according to principles of normative bargaining models and, in fact, systematically violate key principles (Bazerman & Neale, 1983). Primarily as a response to the inadequacy of nor- mative models to account for empirical observation, purely de- scriptive theories of negotiation behavior have developed. De- scriptive theories have been largely the province of psycholo- gists and organization theorists (cf. Bazerman & Carroll, 1987; Kelley, 1966; Pruitt & Rubin, 1986). Descriptive theories exam- ine the influence of individual characteristics, motivations, and cognitive processes on judgment, behavior, and outcomes in negotiation. The focus of this article is on descriptive ac- counts of negotiation behavior. Because of the large volume of research on negotiation behav- ior in many disciplines, it was necessary to restrict the scope of this review in four ways. First, I examined negotiation or ex- plicit bargaining (Chertkoff & Esser, 1976; Cross, 1965; Siegel & 515

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Page 1: Negotiation Behavior and Outcomes: Empirical Evidence and

Psychological Bulletin1990, Vol. 108, No. 3,515-532

Copyright 1990 by the American Psychological Association, Inc.0033-2909/90/$00.75

Negotiation Behavior and Outcomes:Empirical Evidence and Theoretical Issues

Leigh ThompsonUniversity of Washington

This article examines the ability of the individual differences, motivational, and cognitive ap-proaches of negotiation to account for empirical research on dyadic negotiation. Investigators havetypically focused on objective, economic measures of performance. However, social-psychologicalmeasures are important because negotiators often do not have the information necessary to makeaccurate judgments of the bargaining situation. Negotiators' judgments are biased, and biases areassociated with inefficient performance. Personality and individual differences appear to play aminimal role in determining bargaining behavior; their impact may be dampened by severalfactors, such as homogeneity of subject samples, situational constraints, and self-selection pro-cesses. Motivational and cognitive models provide compelling accounts of negotiation behavior. Apsychological theory of negotiation should begin at the level of the individual negotiator andshould integrate features of motivational and cognitive models.

Negotiation is a pervasive and important form of social inter-action. Negotiation is necessary whenever conflict erupts andthere are no fixed or established rules or procedures to resolveconflict and whenever people want to search for agreementwithout resorting to aggression or open fighting (Lewicki &Litterer, 1985). Negotiation occurs in business and academicenvironments and in informal social interactions such as decid-ing with a friend or spouse where to dine or vacation. Clearly,negotiation is essential for anyone who must interact with otherpeople to accomplish their objectives.

There is broad interest in the study of negotiation behavior.This interest is evident in the interdisciplinary history of thestudy of negotiation in the fields of psychology, economics,industrial relations, organization behavior, sociology, and law.The theoretical goal is to predict the processes and outcomes ofnegotiation. The practical or applied goal is to help people nego-tiate more effectively (Bazerman, 1986; Raiffa, 1982). The fun-damental and enduring questions raised by the growing body ofresearch on negotiation behavior include the following: Whatfactors lead to negotiation success or failure? Which theoreticalperspective provides the best account of negotiation behavior?What empirical findings must a theoretical approach to negoti-ation explain? The purpose of this article is to address thesetheoretical and empirical issues.

A variety of theoretical analyses of negotiation behavior havebeen developed. An important theoretical distinction is thatbetween normative and descriptive approaches (Neale &Northcraft, in press; Raiffa, 1982). Normative models arebased on axioms of individual rationality (cf. von Neumann &

I thank Max Bazerman and Reid Hastie for helpful comments ondrafts of this article.

Correspondence concerning this article should be addressed toLeigh Thompson, Department of Psychology, University of Wash-ington, Seattle, Washington 98195, or by bitnet to Ithomp-son@max .acs.washington.edu.

Morgenstern, 1947) and prescribe how people should behave incompetitive situations (Cross, 1965; Harsanyi, 1956; Nash,1950,1953). Normative models have largely been the provinceof economists and game theorists (cf. Cross, 1965; Harsanyi,1956; Nash, 1950). As Raiffa (1982) stated, "Game theorists. . .examine what ultrasmart, impeccably rational, superpeopleshould do in competitive, interactive situations. They are notinterested in the way erring folks like you and me actually be-have, but in how we should behave if we were smarter, thoughtharder, were more consistent, were all knowing" (p. 21). Nor-mative models have advanced the understanding of conflictbehavior by providing compelling analyses of optimal or ratio-nal behavior in competitive situations.

In addition to prescribing how negotiators should behave,some economic models were also intended to describe the ac-tual behavior of negotiators (Nash, 1950). However, empiricalobservation indicates that normative models do not adequatelydescribe the behavior of most people in bargaining situations(Neale & Bazerman, 1985a; Northcraft & Neale, in press;Thompson & Hastie, in press). Specifically, bargainers do notbehave according to principles of normative bargaining modelsand, in fact, systematically violate key principles (Bazerman &Neale, 1983). Primarily as a response to the inadequacy of nor-mative models to account for empirical observation, purely de-scriptive theories of negotiation behavior have developed. De-scriptive theories have been largely the province of psycholo-gists and organization theorists (cf. Bazerman & Carroll, 1987;Kelley, 1966; Pruitt & Rubin, 1986). Descriptive theories exam-ine the influence of individual characteristics, motivations,and cognitive processes on judgment, behavior, and outcomesin negotiation. The focus of this article is on descriptive ac-counts of negotiation behavior.

Because of the large volume of research on negotiation behav-ior in many disciplines, it was necessary to restrict the scope ofthis review in four ways. First, I examined negotiation or ex-plicit bargaining (Chertkoff & Esser, 1976; Cross, 1965; Siegel &

515

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Fouraker, 1960). This definition excluded research on matrixgames such as the Prisoner's Dilemma (for reviews, see North-craft & Neale, in press; Pruitt & Kimmel, 1977; Smith, 1987).Pure negotiation situations differ from social dilemmas interms of the communication between parties, the parties' abil-ity to make provisional offers, the veto power that each partyhas on any outcome other than the disagreement outcome, andeach party's knowledge of the other's payoffs, interests, andstructure of the task (Bartos, 1972; Chertkoff & Esser, 1976;Rapoport, 1968; Siegel & Fouraker, 1960). Second, the focuswas on two parties, or dyadic negotiation, as opposed to multi-party negotiation involving coalitional activity (for reviews ofcoalitional bargaining, see Miller & Komorita, 1986; Mur-nighan, 1986). The review was restricted to bargains in whichnegotiators were monolithic (i.e., negotiators bargain for theirown interests or, if representing a constituency, the constitu-ency members have uniform interests; Raiffa, 1982). Third, Iexamined three theoretical approaches: individual differences,motivational, and cognitive models. These approaches repre-sent the most common theoretical orientations in the study ofnegotiation (Bazerman & Carroll, 1987; Neale & Northcraft, inpress). However, they do not exhaust the set of theoretical per-spectives in negotiation.1 Finally, third-party interventions (e.g.,mediation, arbitration) are not discussed (for reviews, see Ru-bin, 1980; 1986; Sheppard, 1984). This review focused on theinterchange that occurs between two people attempting to re-solve a conflict of interest.

In the sections that follow, I discuss the characteristics andbasic features of negotiation, identify economic and social-psy-chological measures of negotiation performance, review themajor theoretical approaches to negotiation, and examinecurrent empirical research. I conclude by proposing a theoreti-cal and empirical research agenda.

DEFINITION OF NEGOTIATION

Negotiation is the process whereby people attempt to settlewhat each shall give and take or perform and receive in a trans-action between them (Rubin & Brown, 1975). A negotiationsituation has five characteristics: (a) People believe that theyhave conflicting interests; (b) communication is possible; (c)intermediate solutions or compromises are possible; (d) partiesmay make provisional offers and counteroffers; and (e) offersand proposals do not determine outcomes until they are ac-cepted by both parties (Chertkoff & Esser, 1976; Cross, 1965;Schelling, 1960).

The basic features of negotiation include the negotiating par-ties, their interests, the negotiation process, and the negotiationoutcome (Thompson & Hastie, 1990). A party to a negotiationis a person (or a group of persons with common interests) whoacts in accord with his or her preferences. The interests of negoti-ators are the preferences or utilities that each person has for theresources to be divided (Walton & McKersie, 1965). The struc-ture of the bargaining situation is determined by the degree ofconflict between parties' interests. Pure conflict exists whenparties' interests are perfectly negatively correlated; that is, anyoutcome that increases one party's utility decreases the otherparty's utility in a fixed-sum fashion. Pure conflict situationsare known as fixed-sum or purely distributive negotiations

(Walton & McKersie, 1965). Two people bargaining over theprice of a used car for which the seller wants more money andthe buyer wants to pay as little as possible is an example of adistributive negotiation. Pure coordination situations existwhen parties' interests are perfectly compatible; increasing oneparty's utility also increases the other party's utility. A negotia-tion over an orange in which one person desires only the peeland the other desires only the juice is an example (Follett,1940). In empirical investigations, researchers typically do notexamine bargaining in pure coordination situations, althoughinteresting questions concern whether negotiators are able torealize when their interests are compatible with those of an-other (Hammond, Stewart, Brehmer, & Steinmann, 1975;Thompson & Hastie, in press). Sometimes parties' interests areneither completely opposed nor purely compatible. Such situa-tions are known as variable-sum or integrative negotiations(Walton & McKersie, 1965).2 In integrative bargaining situa-tions, the gains of one party do not represent equal sacrifices bythe other. Pruitt (1986) gave the example of a couple in conflictover where to spend a vacation. The husband prefers a cabin inthe mountains; the wife prefers a luxury hotel on the seashore.The husband is primarily concerned with location; the wife isprimarily concerned with accommodations. An integrativeagreement is reached when the couple agree to vacation in aluxury hotel in the mountains. Many researchers contend thatmost negotiation situations are integrative (Pruitt & Rubin,1986; Raiffa, 1982; Walton & McKersie, 1965). Although thereis no empirical evidence to support this contention, two logicalarguments support it. The deductive argument is that two peo-ple are more likely to have different priorities, risk preferences,and valuations of resources than they are likely to have identi-cal preferences across such dimensions. Differences on any di-mension define opportunities for integrative trade-offs (Raiffa,1982). The inductive argument is based on the large volume ofcase studies of negotiation situations in which opportunities forintegrative agreements have been identified (Lax & Sebenius,1985).

The negotiation process is the interaction that occurs be-tween parties before the outcome. Negotiation processes in-clude communication between bargainers and behavioral en-actments of bargaining strategies. The negotiation outcome isthe product of the bargaining situation. Negotiations may endin impasse (i.e., the parties fail to reach a mutually acceptableagreement) or in mutual agreement. In integrative and purecoordination situations, outcomes that result in mutual agree-ment may be examined in terms of the efficiency of the out-come. A negotiation outcome is said to be efficient or paretooptimal if there does not exist some other feasible solution or setof solutions that would improve the utility of one or both par-ties while not hurting either party (Nash, 1950). Finally, negotia-

1 At least two other approaches have been acknowledged: a commu-nications approach and a structural approach (for reviews, see Chat-man & Sondak, in press; Neale & Northcraft, in press). In general,these approaches are more piecemeal and less well developed thanthose reviewed in this article.

2 Technically, the label integrative also includes purely compatiblesituations. In this discussion, integrative refers to situations character-ized by a partial conflict of interest.

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tion outcomes are also examined in terms of the distribution ofresources among bargainers.

MEASURES OF NEGOTIATION BEHAVIOR

Measures of behavior and performance in negotiation maybe grouped into two general categories: economic and social-psychological measures. Economic measures focus on the out-comes or products of the negotiation and are derived from ax-ioms of individual rationality and normative analyses of negoti-ation behavior (Nash, 1953). Social-psychological measuresfocus on both the processes and the outcomes of negotiationand are based on elements and processes of social perception(Thompson & Hastie, 1990). Of course, social-psychologicalmeasures may influence economic measures of performance,and vice versa. The measures are distinguished here becausemany research programs have not included both in their analy-ses, and comparative analyses of behavior are difficult wheninvestigators use different measures of performance. Appar-ently inconclusive results and even contradictory findings mayoften be traced to different measures of performance. The keydistinction is one of perspective: Negotiators typically do notperform a full, rational analysis of the negotiation situationeither because the relevant information is not available or be-cause they ignore or distort information (Thompson & Hastie,1990). Negotiators' perceptions may differ substantially fromobjective economic analyses (Thompson & Hastie, in press).

Economic Measures

Economic measures are based on axioms of individual utilityusually attributed to von Neumann and Morgenstern (1947)and on Bayesian Decision Theory (deGroot, 1970) and repre-sent the most well-formulated specifications of optimal negotia-tion performance. Economic measures are primarily axiom-atic; that is, they focus on the outcomes or products of negotia-tion and do not specify the processes or methods necessary orsufficient to yield such outcomes. Three measures of perfor-mance are specified by normative bargaining models (Nash,1953).

Mutual Agreement

According to most economic bargaining models, negotiatorsshould reach a mutual agreement if the alternative (known asthe disagreement outcome) is worse than what they couldachieve through agreement with the other party.3 Simply stated,negotiators should reach an agreement with the other party if itis in both their interests to do so. The utility of a mutual agree-ment is determined by the zone of agreement defined by negoti-ators' reservation prices (Raiffa, 1982). A negotiator's reserva-tion price represents the minimum that he or she will settle for;anything less represents an outcome that is worse than the dis-agreement outcome. Simply put, an individual's reservationprice is the point at which he or she can achieve equal or greaterutility by engaging in another course of action (e.g., dealing withanother party or simply maintaining the status quo).4 Bargain-ing zones may be positive or negative (Raiffa, 1982; Walton &McKersie, 1965). A positive bargaining zone exists if negotia-

tors' reservation prices overlap; a negative bargaining zone ex-ists if negotiators' reservation prices do not overlap. When apositive bargaining zone exists, both negotiators gain from mu-tual agreement; when a negative bargaining zone exists, negotia-tors do not profit from mutual agreement. For example, if abuyer's reservation price, or maximum amount that he or she iswilling to pay for a used car is $700 and the seller's reservationprice, or the minimum amount that he or she is willing toaccept is $600, a positive bargaining zone exists. A negativebargaining zone would exist if the buyer's reservation price was$600 and the seller's reservation price was $700.

Creating Resources: Integrative Bargaining

When negotiators' interests are not purely competitive, nego-tiation involves not just dividing resources (distributive bar-gaining) but identifying additional value, benefits, and re-sources (integrative bargaining). The economic definition ofintegrative bargaining is precise and refers to whether nego-tiated outcomes are efficient, or pareto optimal. In empiricalexaminations of negotiation behavior, researchers have useddifferent operationalizations of this economic definition. Typi-cally, negotiators' outcomes are summed to form a measure ofjoint profit, which is used as a measure of integration.5 Integra-tive agreements allow negotiators to achieve greater utility, al-low negotiators to avoid potential stalemates, are more stableover time, foster harmonious relations between parties, andcontribute to the welfare of the broader community (Pruitt &Rubin, 1986). Pruitt (1983; Pruitt & Rubin, 1986) identifiedseveral strategies for reaching integrative agreements, includinglogrolling, in which negotiators make trade-offs between issuesso that each party gets all or most of his or her preferred out-come on important issues but concedes on issues of little im-portance (Froman & Cohen, 1970). Thompson and Hastie (inpress) noted that negotiators may reach integrative agreementsby identifying compatible issues. Compatible issues are issuesfor which negotiators have similar preferences.

Claiming Resources: Distributive Bargaining

All negotiation situations, except those in which parties havecompletely compatible interests, involve a distributive compo-

3 This is generally true, but subtleties arise depending upon the par-ticular task. For example, Myerson (1987) proved that impasses occureven when there are gains to trade when bargainers do not have com-plete information.

4 Whereas it is generally assumed that reservation prices are stableand exogenously determined (e.g., they do not change as a result of thebargaining process), other closely related concepts, such as compari-son level for alternatives (Thibaut & Kelley, 1959), minimum necessaryshare (Kelley, Beckman, & Fischer, 1967), reservation points (Walton& McKersie, 1965), and minimum disposition (Ikle & Leites, 1962) aremore labile.

5 Lax and Sebenius (1987) argued that joint profit is not an especiallysensitive measure of integration and developed a measure, called theintegrative quotient, that measures the distance of the outcome fromthe pareto optimal frontier. The few researchers who have used thismeasure have reported high correlations between this measure and thetypical measure of joint profit (Weingart, Thompson, Bazerman, &Carroll, 1990).

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nent (Lax & Sebenius, 1985). The distributive component re-flects the primary motivation of negotiators: to maximize theirutility.6 A fundamental task for the negotiator is to divide re-sources in such a manner that he or she keeps most of thebargaining surplus. The bargaining surplus is the differencebetween one's reservation price and the final settlement(Raiffa, 1982; Walton & McKersie, 1965).

Social-Psychological Measures

Social-psychological measures of negotiation performanceare based on concepts of social perception (Allport, 1955). Theelements of social perception include most aspects of per-ceivers' social worlds: people, their behaviors, and contexts orsituations (Schneider, Hastorf, & Ellsworth, 1979). The mostimportant elements of social perception in negotiation are nego-tiators' perceptions of the bargaining situation, the other partyor bargaining opponent, and themselves (Thompson & Hastie,1990).

The key principles of social perception can be summarizedas list of principles or features (Schneider et al, 1979; Shaver,1987). People actively perceive their social world by selecting,categorizing, interpreting, and inferring information. For exam-ple, negotiators do not know what the interests of the otherparty are but instead make inferences about their opponent(Hammond et al, 1975; Harsanyi, 1962). In some sense, negotia-tors may not be aware of their own interests and values (Fisch-hoff, Slovic, & Lichtenstein, 1980; March, 1978) but rely oncues to guide their behavior and choice (Bern, 1967). The per-ception process is constructive and selective; that is, perceptionis influenced by the salience of information and the order inwhich information is presented, as well as by perceivers' expec-tations, knowledge, and experience. Finally, people's percep-tions influence their behavior.

The principles of social perception have special implicationsfor negotiation situations. In most bargaining situations, negoti-ators do not have the information necessary to perform an ob-jective analysis of the bargaining situation. Consequently, nego-tiators' perceptions of the bargaining situation may be quitedifferent from that provided by an objective economic analysis(Bazerman & Carroll, 1987; Thompson & Hastie, 1990, inpress). Negotiators' perceptions may not only differ from objec-tive analyses but may also differ from those of the other party.Thus two people involved in the same conflict may have differ-ent perceptions about the basis of conflict (Hammond et al.,1975; Pinkley, 1990). People may perceive a conflict of interestwhen in fact none exists, or they may fail to perceive conflictwhen it does exist (Hammond, et al., 1975; Thompson & Has-tie, in press). A number of cognitive and motivational heuristicshave been found to disturb the accuracy of social informationprocessing in a variety of domains (Fiske & Taylor, 1984; Mar-kus & Zajonc, 1985), and similar heuristics have been found tobias judgment and affect behavior in negotiation (Bazerman &Neale, 1983; Thompson & Hastie, 1990, in press).

Perceptions of the Negotiation Situation

Perceptions of negotiation situations involve the judgmentsthat people make about the bargaining process and outcome.

Negotiators' judgments of the fairness of the procedures andoutcomes of negotiation and their expectations and perceivednorms concerning appropriate behavior are examples of socialperception in negotiation (Schelling, 1960; Thibaut & Walker,1975; Tyler, 1986). Negotiators' perceptions of bargaining situa-tions are influenced by their implicit theories of bargaining,conflict, and negotiation (Carroll & Payne, in press). Thesemental structures are typically represented as lists of features oras temporal sequences of events, or scripts, with specific fea-tures, variables, and default values (Abelson, 1976). Bazermanand Carroll (1987) described several examples of bargainingscripts, such as "the car-buying script," "the bidding war script,"and so forth. Negotiators' perceptions of bargaining situationalso include their views of the structure of the bargaining task:purely competitive, cooperative, or integrative (Thompson &Hastie, 1990). Pinkley (1990) noted that negotiators' percep-tions of conflict are multidimensional and may be character-ized by three bipolar dimensions, or "conflict frames": relation-ship-task, emotional-intellectual, and compromise-win.

Perceptions of the Other Party

Perceptions of one's negotiation opponent include many ofthe processes and elements associated with the more generalprocess of person perception and impression formation. Animportant and powerful aspect of person perception is evalua-tion or liking (Osgood, Suci, & Tannenbaum, 1957). Relevantdimensions in negotiation include negotiators' liking and at-traction to the other party and their perceptions of the otherparty's trustworthiness and fairness. Perceptions of the otherparty include the trait inferences that negotiators make aboutthe other party's intelligence, sociability, expertise, skill, ability,cooperativeness, and competitiveness. Perceptions of the otherparty also include the attributions that negotiators make to ex-plain the behavior of their bargaining opponent and the predic-tions they make about the opponent's future behavior. Percep-tions of the other party include negotiators' behavioral inten-tions, such as their willingness to interact with the other partyin the future. Perceptions of the other party are hypothesized tobe mentally represented in memory as a person or role schema(Taylor & Crocker, 1981), in which a person node with the labelassociated with the opponent is connected to a list of features orcharacteristics describing the person (Bazerman & Carroll,1987; Hastie & Kumar, 1979).

Perceptions of the Self

Perceptions of the self include many of the dimensions rele-vant to perceptions of the bargaining opponent, such as skill,cooperativeness, fairness, and so forth. Self-perceptions alsoinclude negotiators' judgments of their own interests, values,goals, and risk preferences (Fischhoff et al., 1980); social com-parisons between the self and the other party (Zechmeister &

6 In most cases, the maximization of utility is assumed to be equiva-lent to maximizing one's own gains. Most economic models assumethat people seek to maximize their own gain. However, some descrip-tive approaches do not assume that negotiators' goals are to maximizeself-gain.

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Druckman, 1973); self-evaluations; and self-presentationalconcerns (Brown, 1968; Hiltrop & Rubin, 1981; Pruitt & John-son, 1970). The hypothesized mental structures used to repre-sent self-perceptions are self-schemata (Markus, 1977).

THEORETICAL APPROACHES AND MODELS

Most descriptive theories and approaches of negotiation be-havior may be classified into one of three broad domains: indi-vidual differences, motivational, and cognitive models (Bazer-man & Carroll, 1987; Carroll & Payne, in press; Neale & North-craft, in press). I now describe each approach and examineempirical research on economic and social-psychological mea-sures of performance.

Individual Differences Approach

The individual differences approach is an attempt to identifystable characteristics of people that reliably affect their bar-gaining behavior and performance. The individual differencesapproach does not represent a single, well-established theory.Rather, it is a collection of disparate hypotheses, predictions,and low-level theoretical statements. Two general classes of the-oretical models characterize the individual difference ap-proach: direct-effect models and contingency models. Accord-ing to direct-effect models, individual differences directly influ-ence social behavior. The hypothesis that women perceiveconflict differently than do men is an example of a direct-effectmodel (Pinkley & Northcraft, 1989). In empirical research, in-vestigators commonly use standardized personality assessmenttechniques to measure characteristics of negotiators. Individualdifferences that have received the most attention in the negotia-tion literature include relationship orientation (Machiavellian-ism; cooperative-competitive orientation); cognitive ability(cognitive complexity; perspective-taking ability), and gender/sex role orientation (Rubin & Brown, 1975).7 These characteris-tics are the primary focus of my analysis.

According to contingency models, negotiation behavior isdetermined by specific characteristics of persons and particu-lar features of the situation. Situational factors in contingencymodels have included communication modality and the pres-ence or absence of bargaining constituents (Zechmeister &Druckman, 1973). The hypothesis that a Machiavellian bar-gainer will take advantage of a non-Machiavellian bargainingopponent when the interaction occurs face to face, but notwhen a barrier obstructs their visual contact, is an example of acontingency model (Fry, 1985). In the next section, researchstudies on the impact of individual differences on economicand social-psychological measures of performance are dis-cussed.

Economic Criteria

Mutual Agreement

Fry (1985) proposed a contingency model relationship be-tween negotiator Machiavellianism and visual accessibility. Fryreasoned that "low-Machiavellian" bargainers would bearoused by and distracted in the presence of "high-" but notlow-Machiavellian bargaining opponents. Fry paired low-low,

high-high, and low-high Machiavellian people and allowedsome to bargain face to face; others bargained through a barrierthat obstructed visual contact. Fry hypothesized that the low-high pairs negotiating face to face would be most likely to fail toreach agreement because the low-Machiavellian bargainerwould be susceptible to the strong emotional appeals advancedby the high-Machiavellian bargainer. The hypothesis was sup-ported. Failure to reach mutual agreement was attributed to thelow-Machiavellian bargainer, who suggested significantly fewerpotential solutions when negotiating face to face with a high-Machiavellian bargainer.

Joint Outcomes

Cognitive ability. Integrative bargaining situations often re-quire problem-solving behaviors to maximize joint gain(Pruitt, 1983; Pruitt & Rubin, 1986). This analysis has led someresearchers to speculate that cognitive reasoning ability mayfacilitate the problem-solving behavior necessary to reach inte-grative outcomes. Pruitt and Lewis (1975) hypothesized thatcognitively complex negotiators entertain more alternative con-ceptions of bargaining situations and gather and integrate moreinformation during bargaining. Therefore, cognitively complexnegotiators should be more likely to find mutually beneficialsolutions than would less cognitively complex negotiators. How-ever, this hypothesis was not supported. Neale and Bazerman(1983) examined another measure of cognitive functioning:perspective-taking ability (Davis, 1981). They hypothesizedthat failure to understand one's bargaining opponent is a pri-mary cause of suboptimal negotiation performance. However,perspective-taking ability did not affect joint performance, asmeasured by the number of issues resolved.

Gender. Other researchers have hypothesized that the sexcomposition of the dyad may affect integrative bargaining out-comes (Kimmel, Pruitt, Magenau, Konar-Goldband, & Carne-vale, 1980; Rubin & Brown, 1975; Turnbull, Strickland, &Shaver, 1976). For example, Kimmel et al. (1980) hypothesizedthat men seek to maximize their own gains, whereas womenrespond to the interpersonal aspect of the situation. However,there was no support for this prediction.

Individual Outcomes

Machiavellianism. In general, Machiavellian bargainersclaim more resources than do non-Machiavellian bargainers(Fry, 1985; Huber & Neale, 1986). According to Fry's (1985)analysis, low-Machiavellian negotiators lose to high-Machiavel-lian negotiators because they are susceptible to the arousing,emotional appeals put forth by high-Machiavellian bargainers.However, Greenhalgh and Neslin (1983) found that Machiavel-lian bargainers performed worse than non-Machiavellians. Thenegotiation task and measures of individual performance usedby Greenhalgh and Neslin differed in many respects from theones used by Fry and by Huber and Neale, and so this apparent

7 In many analyses of individual differences, such as Kelley and Sta-helski's (1970) study of cooperators and competitors, researchers haveused the Prisoner's Dilemma paradigm, and those studies are not cov-ered in this review.

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inconsistency may be attributable partly to the task. These re-sults also suggest that trait Machiavellianism may not directlyinfluence negotiation behavior but may instead interact withsituational and task constraints to influence performance.

Cognitive ability. Cognitive reasoning skills have been pre-dicted to increase negotiators' ability to claim resources. Forexample, Neale and Bazerman (1983) reasoned that negotiatorswith high perspective-taking ability would be able to persuadetheir opponents to settle close to their reservation price andtherefore claim most of the bargaining surplus for themselves.Results supported the hypothesis: Negotiators with high per-spective-taking ability earned higher outcomes than did thosewith low perspective-taking ability. Neale and Bazerman con-cluded that bargainers with high perspective-taking ability areable to learn more information about their opponent, whichallows them to accurately assess their opponent's goals, expec-tations, and reservation price. However, Greenhalgh and Nes-lin (1983) found that perspective-taking ability was not predic-tive of individual utility. Again, the task and the dependentmeasure of performance were different from those used byNeale and Bazerman. The impact of perspective-taking abilityon performance may depend in part on the particular bargain-ing situation.

Social-Psychological Measures

Investigators of individual differences on social-psychologi-cal measures have primarily explored the direct effects ofgender and sex role orientation on perceptions.

Perceptions of the Bargaining Situation

Although there is no clear evidence suggesting that men aremore or less effective negotiators than are women, men mayperceive conflict differently than do women (Gilkey & Green-halgh, 1984; Pinkley, 1990; Zechmeister & Druckman, 1973).In general, men are more concerned with winning and maxi-mizing their outcomes, whereas women are more concernedwith maintaining the relationship. For example, Pinkley foundthat women were more likely than men to interpret a conflictsituation in relationship terms, whereas men were more con-cerned with the exchange of resources. Zechmeister andDruckman (1973) reported that men rated "coming out favor-ably" as more important than did women.

Perceptions of the Opponent

Women tend to perceive their opponents as similar to them-selves, whereas men perceive themselves as fundamentally dif-ferent from their opponents (Gilkey & Greenhalgh, 1984; Zech-meister & Druckman, 1973). Zechmeister and Druckman(1973) found that women rated themselves as more similar totheir opponents in terms of attitudes toward racial problems(the subject of the negotiations) after negotiation than did men;Gilkey and Greenhalgh (1984) measured negotiators' sex roleorientations and found that "feminine" negotiators were moreempathic than were "masculine" negotiators.

Perceptions of the Self

There is some evidence for sex differences in terms of negotia-tors' evaluations of their own performance (Kimmel et al.,1980; Turnbull et al., 1976). Women engage in more self-deroga-tion during negotiation than do men (Kimmel et al, 1980).Men perceive themselves as more powerful than do women(Turnbull et al, 1976). Again, although men evaluate them-selves more favorably than women evaluate themselves, there isno clear evidence suggesting that men actually perform betterthan women.

Discussion

On the basis of the studies examined in this review, there issome suggestion that certain individual differences may be re-lated to bargaining behavior. The clearest relationships appearamong cognitive reasoning ability and individual performanceand among gender and perceptions of negotiation. However,these conclusions are based on a small number of studies andshould therefore be viewed as tentative. A further caveat is thatresearchers have not been consistent in their reporting of sexdifferences; many report sex difference effects as a secondaryanalysis. The implication is that in a large number of studies,the researchers also performed secondary analysis and did notfind or did not report null results for gender.

The scant number of clear relationships observed in this re-view is consistent with Hamner's (1980) conclusion that thereare few significant relationships between personality and nego-tiation outcomes. Some researchers have even stated this moreforcefully: "From what is known now, it does not appear thatthere is any single personality type or characteristic that is di-rectly and clearly linked to success in negotiation" (Lewicki &Litterer, 1985, p. 276). However, this conclusion is incompleteand overly simplistic. It is only reasonable to assume that indi-vidual characteristics influence bargaining behavior. People ex-hibit a great deal of consistency across situations, and this sug-gests that personality is an important influence on social behav-ior (Staw & Ross, 1985).

So, why do individual differences not appear to play a centralrole in experimental investigations of negotiation? There areseveral possible explanations (Lewicki & Litterer, 1985). First,individual differences are often measured with a homogeneoussample of subjects, usually college students. The failure to ob-serve relationships between individual differences and bargain-ing behavior may be attributed partially to the narrow range ofindividual differences within subject populations (Hamner,1980). A second possibility concerns the assessment of individ-ual differences. Most individual differences are assessed bymeans of paper-and-pencil measures. However, the key depen-dent variables of interest in negotiation are typically behavioralmeasures of performance. Given the inconsistency between at-titudes and behavior and the unreliability of self-report mea-sures, behavioral assessment of individual differences mayyield more reliable and consistent relationships with social be-havior (Staw & Ross, 1985). A third explanation is that otherfactors may outweigh the more subtle effects of personality inbargaining (Davis-Blake & Pfeffer, 1989). Monson, Hesley, andChernick (1982) suggested that personality is more predictive

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of behavior in ambiguous situations than in settings in whichthere are strong prescriptions for behavior. Fourth, personalitymay not exert main effects on negotiation performance butrather may interact in complex ways with situational factorsand characteristics of the particular task (Fry, 1985; Harnett,Cummings, & Hughes, 1968). This alternative suggests that acontingency approach may have more predictive validity than adirect-effect model. Fifth, the absence of a comprehensivetheory relating individual differences to negotiation behaviormakes it difficult to identify clear relationships. Finally, it maybe that individual characteristics of bargainers exert their im-pact on prenegotiation behaviors—that is, factors that predis-pose people to avoid or engage in negotiation, rather than onbargaining behavior per se (Emmons & Diener, 1986). In thissense, individual differences act as an important self-selectionprocess in negotiation that is not captured by extant measuresof negotiation behavior and performance.

Motivational Approaches

Motivational models of bargaining behavior examine the in-fluence of aspirations and goals on bargaining behavior andoutcomes. Two general theoretical approaches have developedwithin this broad area. According to one approach, aspirationis a continuous, unidimensional concept ranging from low tohigh (Hamner & Harnett, 1975; Siegel & Fouraker, 1960). Aspi-ration is denned in terms of utility theory, and a negotiator'saspiration level is represented as a position on his or her bar-gaining utility function (Siegel, 1957). In general, the memberof the bargaining pair who has a higher level of aspiration ob-tains a larger share of the joint profit (Siegel & Fouraker, 1960).Negotiators with high aspirations make smaller concessions,make larger demands, take longer to reach agreement, and earnhigher profits than do negotiators with low aspirations (Siegel &Fouraker, 1960).

The second approach differs from aspiration-level theoriesby positing that bargaining goals are not unidimensional andthat the maximization of gain is not the primary goal of bar-gaining (Blake & Mouton, 1962; Pruitt & Rubin, 1986). Accord-ing to the Dual Concern Model (Pruitt & Rubin, 1986), negotia-tors' goals are determined by two independent factors: negotia-tors' concern for themselves and their concern for the otherparty. This approach also differs from aspiration-level theoriesin that utility functions are not continuous but are modeled asdiscrete functions. In the model, concern is either high or lowfor each factor (self; other party), and the resulting product is afour-cell matrix specifying the strategies associated with eachgoal orientation. A key prediction of the Dual Concern Modelis that negotiators who have a high degree of concern for them-selves coupled with a high degree of concern for the other partywill reach more integrative outcomes than will negotiators whoare concerned only with maximizing their own outcomes, nego-tiators who are concerned only with the other party, and negotia-tors who are not concerned with themselves or the other party.

Economic Criteria

Mutual Agreement

A key prediction of aspiration-level models is that high aspira-tions block opportunities for mutual agreement and increase

the likelihood of an impasse. Two separate lines of evidencesupport this prediction: studies of constituency pressure andexplicit goal setting.

Constituency pressure. The first line of support is based onstudies in which researchers examined aspirations indirectly,typically by manipulating the amount of constituency pressureon bargainers (Carnevale, Pruitt, & Britton, 1979). The hypoth-esis is that negotiators who represent a larger group or constitu-ency feel accountable to their constituency and pressured tomeet their goals and, consequently, adopt higher aspiration lev-els and remain firmer in their aspirations than do negotiatorswho are not under constituency pressure (Neale, 1984; Pruitt &Lewis, 1975; Tjosvold, 1977). Tjosvold (1977) found that negoti-ators under constituency pressure to maximize gains weremore likely to reach impasses than were those whose constitu-encies encouraged them to reach a fair outcome. In a similarstudy, Neale (1984) told some negotiators that their outcomeswould be determined by evaluations of their performance thatwere made by constituency members (high constituency-pres-sure group); others were not told that their outcomes were con-tingent on constituency evaluations (low constituency-pressuregroup). Impasses occurred more often when constituency pres-sure was high.

Explicit goal setting. The second line of support is based onstudies in which researchers attempted to manipulate negotia-tors' aspirations by providing them with a specific goal or tar-get value to achieve. Most of this research has been conductedusing the experimental bargaining market paradigm (cf. Bazer-man, Magliozzi, & Neale, 1985). In experimental bargainingmarkets, several buyers and sellers interact under the instruc-tion that they should complete as many profitable negotiationsas possible in a fixed amount of time. Negotiators are given aspecific goal to achieve in the negotiation. This is typicallyoperationalized by instructing negotiators to meet or exceed agiven payoff level. In general, negotiators who are given spe-cific, challenging, or demanding goals complete fewer success-ful transactions than do those not given challenging goals (Ba-zerman et al, 1985; Huber & Neale, 1987; Neale & Bazerman,1985a, 1985b; Neale, Northcraft, & Barley, 1988). One explana-tion of this finding is that negotiators with high aspirationshave more unsuccessful transactions (i.e, reach more impasses)than do negotiators with lower aspirations. However, an equallyplausible interpretation is that negotiators with high aspirationsdo not make as many attempts to negotiate as do those with lowaspirations, perhaps because negotiators with high aspirationsspend a longer time negotiating (Neale & Bazerman, 1985b).Unfortunately, the number of transactions attempted, the num-ber actually completed, and the time to complete them werenot reported; so it is not possible to determine whether highaspirations are related to higher impasse rates or simply fewerattempts to negotiate. If high aspirations lead to more frequentimpasses, a central question concerns the mechanism involved:Specifically, do high aspirations prevent negotiators from dis-covering viable agreements, or are negotiators with high aspira-tions more reluctant to agree to proposals that barely exceedtheir reservation price (cf. Kelley et al, 1967)? Stated anotherway, do bargainers become committed to positions and refuseto move away from their demands, or are bargainers reluctantto adopt feasible solutions?

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Dual Concern Model. The Dual Concern Model (Pruitt &Rubin, 1986) suggests that the relationship between aspirationand bargaining outcomes is more complex and requires consid-eration of negotiators' concern for the other party in addition totheir own level of aspiration. According to the Dual ConcernModel, high concern for oneself coupled with low concern forthe other party increases the likelihood of an impasse becauseboth parties will engage in contentious behavior rather than theproblem-solving behavior hypothesized to be necessary for in-tegrative agreement. In contrast, negotiators who have high aspi-rations coupled with concern for the other party should bemore likely to engage in problem solving that results in mutualagreement (Pruitt & Rubin, 1986). The empirical evidencebearing on this hypothesis is mixed. Two studies have foundclear support for the model's predictions (Carnevale & Lawler,1986; Pruitt & Lewis, 1975). For example, Pruitt and Lewis(1975) manipulated negotiators' aspirations by instructingthem to meet or exceed either a high or a low payoff; theymanipulated concern for the other party by instructing negotia-tors to adopt either an individualistic or a cooperative orienta-tion. Negotiators with high aspirations and individualistic ori-entations were most likely to reach an impasse. Two direct testsof the model were equivocal: The effects were in the predicteddirection, but not significant (Ben Yoav & Pruitt, 1984a, 1984b).One study did not support the predictions of the model (Pruitt,Carnevale, BenYoay, Nochajski, & Van Slyck, 1982).

Whereas "concern" for the other party per se does not consis-tently influence the likelihood of impasse, negotiators doappear to be sensitive to overt attempts by the other partyto exploit or manipulate them. For example, Cruder (1971)found that negotiators who bargained with "exploitative" oppo-nents—people who misrepresented their reservation price—were more likely to reach an impasse than were negotiators whobargained with "fair" opponents. Tjosvold (1978) similarlyfound that negotiators who interacted with a partner who indi-cated an intention to control rather than collaborate were morelikely to reach an impasse.

Joint Outcomes

Explicit goal setting. The research on explicit goal setting isderived from aspiration-level theories (Siegel & Fouraker,1960). In general, higher aspirations are predicted to lead togreater joint profit. The reasoning is that negotiators with highaspirations are more likely to explore ways of maximizing theiroutcomes because simple compromises do not satisfy theirgoals, whereas negotiators with low aspirations are more likelyto settle for obvious solutions yielding low joint payoffs (Kelley& Schenitzki, 1972). In some experiments, negotiators are givena specific payofflevel or target value to achieve, others are givenlower targets, and a control group that is not given a target valueor goal instruction is often included. In general, negotiatorswith high target levels are more likely to reach integrative agree-ments (Bazerman et al., 1985; Huber & Neale, 1986,1987; Mc-Alister, Bazerman & Fader, 1986; Neale & Bazerman, 1985b;Neale & Northcraft, 1986; Neale, Northcraft, & Early, 1988;Scholz, Fleischer, & Bentpup, 1982). However, there is an im-portant qualification. Explicit goals increase the profitabilityof negotiation outcomes as well as the time required to com-

plete negotiation transactions, which results in fewer transac-tions completed within a fixed amount of time (Neale & Bazer-man, 1985b). Thus a curvilinear relationship between goal dif-ficulty and total profitability exists when total profitability isthe product of the number and the value of completed transac-tions. Again, this is an instance in which apparently contradic-tory findings may be traced to different measures of perfor-mance.

Dual Concern Model. According to the Dual ConcernModel, the relationship between goals and outcomes is morecomplex and requires consideration of negotiators' attitudes to-ward the other party (Pruitt & Rubin, 1986). The prediction isthat high aspirations will increase joint outcomes only whenthe negotiator is concerned with the interests of the other party.The first empirical examination bearing on this hypothesis (al-though not intended as a test of the model) was a study in whichnegotiators were instructed either to maximize their own gains(individualistic orientation) or to maximize joint gains (teamorientation; Kelley & Schenitzki, 1972). Furthermore, negotia-tors were told that their monetary payoffs would depend eitheron their own outcomes or on the joint amount of resourcesachieved. The paradoxical result was that negotiators with anindividualistic orientation achieved higher joint outcomes thandid those with a team orientation. However, this effect wasobtained only when negotiators communicated through writ-ten messages; the effect disappeared when negotiators commu-nicated face to face. Schulz and Pruitt (1978) hypothesized thatnegotiators with a team orientation would reach higher jointoutcomes if given an opportunity to divulge information abouttheir interests—something they were not allowed to do in Kel-ley and Schenitzki's study. Negotiators were instructed to adopteither an individualistic or a team orientation; some pairs com-municated freely, and others were restricted to truthful infor-mation exchange. In contrast to Kelley and Schenitzki's find-ing, and in support of the Dual Concern Model, negotiatorswith a team orientation achieved higher joint profits than didpairs with individualistic orientations; the communicationconditions did not affect joint profitability.

In subsequent studies, Pruitt and his colleagues have testedpredictions of the Dual Concern Model by independently ma-nipulating negotiators' concern for themselves and concern forthe other party. They manipulated concern for the self by in-forming negotiators that they were accountable to a larger con-stituency (Ben-Yoav & Pruitt, 1984b) or by providing negotiatorswith an explicit goal to reach (Ben-%av & Pruitt, 1984a). Theyoperationalized concern for the other party by providing negoti-ators with a small gift (Carnevale & Isen, 1986; Pruitt et al.,1982), leading some negotiators to expect cooperative futureinteraction with their opponent (Ben-Yoav & Pruitt, 1984a,1984b), or by encouraging negotiators to adopt a cooperativeorientation (Carnevale & Lawler, 1986). The prediction thathigh concern for oneself coupled with high concern for theother party leads to higher joint outcomes has generally beensupported (Ben-Yoav & Pruitt, 1984a, 1984b).

Individual Outcomes

Aspirations also improve distributive bargaining behavior.Bargainers who have specific, explicit goals achieve higher indi-

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vidual outcomes than do bargainers not given explicit goals toachieve (Huber & Neale, 1986,1987; McAlister et al, 1986)."One complication with providing negotiators with an explicitgoal is that the goal may not be adopted by the subject or thegoal may provide clues to subjects about the structure of thenegotiation task. Simply put, a negotiator who is told to maxi-mize joint gain rather than individual gain may realize that theexperimenter's game does not contain a fixed amount of re-sources. Similarly, the bargainer who is instructed to try to earna large amount of profits may similarly (and accurately) reasonthat there may be more resources available than a fixed-sumsituation would dictate. One solution to these cuing problems isto measure goals, rather than to manipulate goals. For example,Hamner and Harnett (1975) measured negotiators' aspirationsand found that bargainers with higher aspirations were moresuccessful than were those with lower aspirations.

Social Psychological Measures

A small number of researchers have examined the implica-tions of constituency pressure on negotiators' perceptions ofbargaining. In general, constituency pressure is hypothesizedto increase negotiators' aspirations (Carnevale et al, 1979).

Perceptions of the Bargaining Situation

Negotiators under constituency pressure view bargaining sit-uations as more competitive and less productive than do bar-gainers who do not represent a constituency or at least do notfeel pressured to maximize profits for a constituency (Druck-man & Zechmeister, 1973; Tjosvold, 1977; Zechmeister &Druckman, 1973). Negotiators whose constituencies pressurethem to maximize individual profits report less willingness tocompromise, fewer efforts to be just, and fewer feelings of gen-erosity than do negotiators whose constituencies are committedto "justice" (Tjosvold, 1977). Negotiators who confer with theirconstituency to formulate arguments before negotiation aremore likely to view negotiation as a win-lose, competitive en-terprise than are negotiators who spend time with members ofthe other party before negotiation (Druckman & Zechmeister,1973). Thus constituency pressure in the form of sanctions andevaluations reduces the bargainer's perception of personal con-trol and satisfaction with the bargaining process, but it does notnecessarily hinder the quality of the economic outcomes andmay even improve performance when constituents provide ne-gotiators with specific goals to achieve.

Perceptions of the Other Party

Tjosvold (1977) found that negotiators under pressure fromtheir constituencies to maximize gains perceived themselves asmore dissimilar to their opponents than did negotiators whowere not under pressure to maximize gains.

Discussion

Aspirations play an important role in determining bargain-ing behavior and performance. The research findings are clearbut complex: Higher aspirations increase profitability but de-crease negotiators' willingness to concede from their target

points. Thus high aspirations may improve individual and jointoutcomes in some situations but lead to an unnecessary im-passe in other situations. Economic bargaining theory cannotaccount for these empirical findings because aspirations or tar-get values are theoretically independent of reservation prices,and it is reservation price that determines the size of the bar-gaining zone and hence the likelihood of impasse. The empiri-cal evidence suggests, however, that aspiration values and reser-vation price are not independent and that increasing the negoti-ators' target value also affects their reservation price. This ofcourse suggests that reservation price is not exogenously deter-mined but a psychological value. The most likely psychologicalexplanation of this relationship is the anchoring and adjust-ment heuristic in which one estimates a value or a position on adimension by starting with some initial value (anchor) and thenadjusting it (Tversky & Kahneman, 1974). Typically, adjust-ment is insufficient (e.g, the judgment of the new position is tooclose to the initial value).

The primary theoretical concerns with motivational ap-proaches are the operationalization and measurement of aspira-tions. The common method used to examine aspiration is toinstruct negotiators to meet or exceed an explicit, fixed payofflevel. However, experimenter-provided goals may not act as anaspiration as intended but may instead provide subjects withunintentional information about the structure of the bargain-ing task (e.g, a variable-sum structure). Furthermore, there istypically no assessment to indicate whether bargainers acceptthe experimenter-provided goals. Another problem is that nego-tiators' goals may change during the course of bargaining(Werner & Tietz, 1982), yet in empirical analyses researchershave assumed goals are stable throughout bargaining.

The Dual Concern Model represents a dramatic shift fromtraditional bargaining theories that view aspiration as a continu-ous, unidimensional concept in which the primary objectiveattributed to negotiators is that of maximizing individual gain.A key concern with the Dual Concern Model is the experimen-tal incentives and the theoretical concepts. Subjects are typi-cally instructed to earn as many points as they can in a negotia-tion task in which they know only their own preferences. Thisaspect of the experiment is designed to induce a high concernfor oneself. Then subjects are told that they should expect tointeract with the other party in the future (Ben%av & Pruitt,1984a, 1984b) or are given a small gift from the experimenter(Pruitt et al, 1982). This aspect of the experiment is designed toheighten negotiators' concern for the other party. However, it isunclear whether this manipulation actually produces greaterconcern for the other party; no manipulation checks are re-ported. Furthermore, even if subjects are motivated to careabout the other party, it is not clear how they transform theirmotivation into behaviors and strategies, given that they do notknow the interests of the other party.

A more serious concern with the model is that the experimen-tal manipulations used to induce concern for the other party

8 A methodological complexity is the fact that the higher joint out-comes obtained in the high-aspiration conditions are confounded withthe measure of individual profit. A pure measure of individual profitwould require a comparison of outcomes within each bargaining pair.

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also contain unintentional clues about the variable-sum struc-ture of the task. Simply put, if negotiators are told to maximizejoint outcomes, they may logically conclude that the task is nota fixed-sum game. Thus the goal orientation is confoundedwith information about the structure of the task.

The model also has difficulty accounting for how negotiatorswho have individualistic orientations (e.g., no or little concernfor the other party) reach integrative outcomes (Bazerman et al,1985; Kelley, 1966; Kimmel et al, 1980; Thompson & Hastie, inpress). According to the Dual Concern Model, integrative out-comes are reached through joint problem-solving in which bothparties are concerned with each other's welfare. However, highjoint outcomes may be reached without problem-solving ef-forts, through the efforts of each party to pursue his or her owninterests (Kelley & Schenitzki, 1972). The model has similardifficulty explaining how negotiators who are presumablyhighly concerned with their opponents' welfare (e.g., partners inromantic relationships) fail to reach mutually beneficial out-comes (Fry, Firestone, & Williams, 1983).

Finally, the model is restrictive and difficult to generalize.Concern for oneself and another is modeled in an overly sim-plistic fashion: either high or low. It is possible that negotiatorshave more complex goals, such as a desire to reach a fair out-come (Loewenstein, Thompson, & Bazerman, 1989; Schelling,1960). These alternative goals are not captured by the model.Furthermore, the model's predictions are limited to situationsin which negotiators have the same bargaining orientation. It isnot clear what predictions would be made for situations inwhich negotiators have different motivational orientations.

Cognitive Approach

According to the cognitive approach, negotiation is a com-plex decision-making task in which negotiators are faced withalternative courses of action, and choices among behavioral al-ternatives are determined by negotiators' judgments of the task(Bazerman & Carroll, 1987). Negotiators construct mental rep-resentations of the negotiation situation and their opponent,and their behavior is influenced by their judgments of the otherparty, their own bargaining role, and the bargaining situation.

The basis of the cognitive approach is information-process-ing theory (Bazerman & Carroll, 1987; Carroll & Payne, inpress). Cognitive information-processing theory is a theory ofthe mind of the individual actor. The essential elements of theinformation-processing approach are presented as a list of gen-eral principles briefly described here (see Anderson, 1985, andHastie, 1986, for more extensive treatments). The fundamentalmaterial of the information-processing approach is informa-tion. Information is typically represented as a list of features;concepts are represented as nodes labeled with a word or aphrase, and relations between idea nodes are symbolized theo-retically as links in a network. Information is stored in memoryin one of several alternative structures. The most common is alist of concepts, wherein each concept is linked to one or twoadjacent nodes. Information is available according to simplespreading-activation principles. Activation spreads from acurrently active location in a knowledge structure to othernearby locations; the spread is rapid, and the amount of activa-tion of proximate locations is inversely related to the number of

locations, and it diminishes sharply with the distance from thesource of activation (Anderson, 1985). An executive monitorcontrols the information-processing system by operating ongoals and plans organized into a control structure hierarchy.The larger information-processing system comprises a series ofcomponent locations that are referred to as independent memo-ries. The information-processing system tends to behave eco-nomically to accomplish it goals by expending a minimumamount of time and processing resources. This tendency givesrise to heuristics or cognitive shortcuts that facilitate informa-tion processing but often produce inaccurate judgments andbiases (Tversky & Kahneman, 1974).

Researchers have enhanced theoretical development of thecognitive approach by identifying the judgment tasks that nego-tiators face (Carroll & Payne, in press; Thompson & Hastie,1990), examining negotiators' mental representations of thetask and their opponent (Carroll, Bazerman, & Maury, 1988;Pinkley, 1990; Thompson & Hastie, in press), examining theaccuracy of negotiators' judgments (Bazerman & Carroll, 1987;Thompson & Hastie, in press), and exploring the relationshipbetween judgment and behavior (Thompson & Hastie, inpress). Methodologies, such as recall and think-aloud measuresare used to examine information processing and judgment innegotiation (Carroll et al, 1988; Thompson & Hastie, 1990, inpress). A number of judgment errors have been identified innegotiation (Bazerman & Neale, 1983; Thompson & Hastie,1990, in press), and heuristic information processes similar tothose identified in individual decision-making tasks are hy-pothesized to guide social judgment and behavior in negotia-tion.

Economic Criteria

Mutual Agreement

Neale and Bazerman (1985a) derived a prediction from pros-pect theory to examine whether a negotiator's mental represen-tation of the task, or cognitive frame, influences bargainingbehavior. According to prospect theory (Kahneman & Tversky,1979), people have different utility functions for gain and loss,and objectively identical decision tasks produce differentchoices among identical options when the reference point de-fining gain and loss is altered. The hypothesis was that negotia-tors who were risk averse would be more likely to make conces-sions to avoid an impasse; in contrast, risk-seeking negotiatorswould be less likely to make concessions and more likely to riskan impasse. Neale and Bazerman examined two factors thatthey thought would affect risk aversion: the framing of negotia-tion payoffs and negotiators' judgments of the probability thattheir offer would be selected by a neutral third party underfinal offer arbitration. They manipulated reference points byinstructing some negotiators to "maximize gain" and providingnegotiators with payoff schedules containing positive numbers;negotiators with a negative frame were instructed to "minimizeloss" and were provided with a payoff schedule containing nega-tive numbers. Of course, the negotiation tasks were objectivelyidentical. Neale and Bazerman further hypothesized that nego-tiators who believed that an arbitrator would choose their offerunder final offer arbitration would be less likely to compromise

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and more likely to risk reaching an impasse than would negotia-tors who were less confident that their offer would be selected.They therefore instructed half of the negotiators in their sampleabout the overconfidence judgment error; the remaining halfwere not given training. As predicted, negotiators who viewednegotiation in terms of minimizing loss and who believed thattheir offer would be chosen in the case of final offer arbitrationwere more likely to reach an impasse. Neale and Bazermanconcluded that framing affects negotiation behavior in a man-ner similar to that observed in individual decision-makingtasks.

Joint Outcomes

Framing of negotiation payoffs. Predictions derived fromprospect theory have also been tested to examine joint profit-ability in negotiation (Bazerman et al, 1985; Neale & Bazer-man, 1985a; Neale, Huber & Northcraft, 1987; Neale & North-craft, 1986). The prediction is that negotiators with a positiveframe (who view negotiation in terms of maximizing gain)should be risk averse, whereas those with a negative frame (whoview negotiation in terms of minimizing loss) should be riskseeking. Risk aversion should lead to more concessionary be-havior and higher joint outcomes; risk seeking should lead tomore contentious behavior and more impasses, resulting inlower joint outcomes. This prediction has received support in anumber of studies (Bazerman et al, 1985; Neale & Bazerman,1985a; Neale et al, 1987; Neale & Northcraft, 1986). However,there is an important qualification. Most of this research isbased on market simulations in which negotiators make a num-ber of transactions. Positively framed negotiators completemore transactions than do negatively framed negotiators, whichresults in greater total profit; however, negatively framed negoti-ators earn more per transaction (Bazerman et al, 1985; Neale &Bazerman, 1985b; Neale et al, 1987; Neale & Northcraft, 1986).Again, this is an example of how different measures of perfor-mance appear to yield inconsistent results.

Judgment accuracy. Thompson and Hastie (1990, in press)hypothesized that misperceptions of the other party are a pri-mary cause of suboptimal outcomes in negotiation. They rea-soned that a key judgment that negotiators make concerns theirperception of the other party's interests and the structure of thebargaining task (e.g., purely competitive or integrative; Thomp-son & Hastie, 1990, in press). Thompson and Hastie identifiedtwo critical judgments that negotiators make about the otherparty's interests: compatibility judgments and priority judg-ments. When negotiators make compatibility judgments, theydetermine whether all or only some of their interests are incom-patible with those of the other party. The tendency to perceiveconflict when none exists is referred to as incompatability error(Thompson & Hastie, in press). Priority judgments concernnegotiators' perceptions of the other party's evaluation of therelative importance of the to-be-negotiated issues. If the twoparties have different evaluations of the relative importance ofthe issues, then an integrative solution is possible (Pruitt &Rubin, 1986; Raiffa, 1982). Simply put, when negotiators havedifferent values, each has something to offer that is relativelyless valuable to them than to those with whom they are bar-gaining. The tendency for negotiators to assume that the other

party places the same importance on, or has the same prioritiesfor, the negotiation issues as they do when in fact negotiatorshave different priorities is referred to as the fixed-pie error (Ba-zerman & Neale, 1983; Thompson & Hastie, in press). Thomp-son and Hastie (1990, in press) measured negotiators' percep-tions several times during negotiation and found that judgmentaccuracy was strongly related to negotiation outcomes: negotia-tors who made accurate priority and compatibility judgmentsattained higher joint outcomes than did those who made fixed-pie and incompatibility errors. The conclusion was that negotia-tors' perceptions influence their behavior and the quality oftheir outcomes.

Claiming Resources

Framing of negotiation payoffs. Buyers tend to outperformsellers in symmetric bargaining tasks (Bazerman et al, 1985;Eliashberg, LaTour, Rangaswamy, & Stern, 1986; Huber &Neale, 1986; McAlister et al, 1986; Neale & Northcraft, 1986).This effect is perplexing because the roles of "buyer" and"seller" in these laboratory tasks are objectively identical; nei-ther party has an inherent advantage. Neale et al. (1987) hy-pothesized that this phenomenon may be interpreted as a fram-ing effect. They reasoned that buyers view negotiation in termsof losing resources or giving up something, whereas sellers viewnegotiation in terms of gaining resources. This interpretation,in light of prospect theory's prediction that people have differ-ent utility functions for gain and loss, suggests that buyers arerisk seeking and sellers are risk averse. Neale et al. hypothesizedthat the more risk seeking the negotiator is, the higher the pre-mium he or she would demand for a negotiated settlement andthe greater amount of resources he or she would claim. To testtheir hypothesis, Neale et al. had some negotiators complete atraditional negotiation task involving buyer and seller roles; theother subjects completed a task that was objectively identicalexcept that the context was changed: the labels buyer and sellerwere changed to mythical names that presumably would notlead to different gain/loss frames. When role information wasabsent (mythical roles), task characteristics influenced meanprofit per transaction: Negatively framed bargainers outper-formed positively framed bargainers. However, when role infor-mation was present (buyer-seller roles), role information in-fluenced mean profit per transaction: Buyers outperformedsellers. The conclusion was that there are multiple sources offraming bias in negotiation: those that are responses to taskdemands and those that are contextually elicited by roles.

Judgment accuracy. Thompson and Hastie (1990, in press)hypothesized that the accuracy of negotiators' perceptions ofthe other party's interests should play a large role in determin-ing outcomes. The reasoning was that negotiators who makeinaccurate judgments about the other party assume that theother party's interests are completely opposed to their own, andthey therefore overlook opportunities for mutual gain and settlefor suboptimal solutions. In a series of studies, the relationshipbetween the accuracy of priority and compatibility judgmentsand bargaining performance was examined. A strong relation-ship between judgment accuracy and payoffs emerged: Negotia-tors who made more accurate judgments about the other party'sinterests earned higher individual payoffs.

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Social Psychological Criteria

Perceptions of the Bargaining Situation

Bazerman and Neale (1983) speculated that negotiators bringa fixed-pie, or win-lose, perception to negotiation. They fur-ther argued that the fixed-pie perception represents a faultyjudgment when negotiation situations are truly integrative orprovide opportunity for joint gain. Thompson and Hastie(1990) measured negotiators' perceptions immediately before, 5min into, and immediately after an integrative negotiation task.The majority of negotiators entered negotiation with a fixed-pieperception of the task. As the negotiation progressed, somenegotiators learned that the other party's interests were not com-pletely opposed to their own. However, misperceptions afternegotiation were still substantial. For example, after negotia-tion, most negotiators (85%) failed to realize that they had inter-ests on one issue that were perfectly compatible with those ofthe other party, and a majority (68%) had a fixed-pie perception.The conclusion is that negotiators bring a win-lose, competitiveexpectation to negotiation that is remarkably resistant tochange.

Perceptions of the Opponent

Negotiators tend to perceive the other party as completelydissimilar to themselves. For example, negotiators expect theother parties' interests to be completely opposed to their own(Thompson & Hastie, 1990). This expectation persists evenafter bargains in which negotiators have some interests that arecompletely compatible with those of the other party (Thomp-son & Hastie, in press). The existence of the fixed-pie and in-compatibility perceptions suggests that negotiators often usetheir own interests to make an inference about those of theother party. The typical inference process is to assume that theother party's interests are completely opposed to one's own.

A complementary psychological process was suggested byOskamp (1965) and Stillinger and Ross (1987). Stillinger andRoss hypothesized that negotiators reason that proposals of-fered by their opponent must be less advantageous for them-selves and more advantageous to the adversary than they ap-pear to be. Simply put, negotiators reason that whatever is goodfor their opponent must be bad for themselves. This suggeststhat proposals and offers suggested by opponents may be deval-ued in negotiation. To examine this hypothesis, Stillinger andRoss had some negotiators rate the value of an opponent's con-cession before it was actually made; others rated the value afterthe concession was offered. Negotiators engaged in reactive de-valuation: They devalued the concessions after they were of-fered by their opponent.

The Thompson-Hastie analysis differs from the Stillinger-Ross effect in terms of the locus of the inference process.Thompson and Hastie (1990, in press) posited that negotiatorsmake inferences about their opponent's interests on the basis oftheir own values; Stillinger and Ross (1987) suggested that nego-tiators make inferences about their own values on the basis ofthose articulated by the other party. Are these inference pro-cesses contradictory? I believe that both processes characterizesocial inference in negotiation and that the occurrence of eachprocess depends on the strength, clarity, and commitment of

negotiators' values and the other party's interests. When negoti-ators are uncertain about their own interests or have conflictinginterests, then reactive devaluation processes most likely char-acterize bargaining behavior. However, when negotiators' owninterests are available and clear, then fixed-pie and incompati-bility inferences characterize bargaining behavior. The impor-tant implication is that both inference processes lead to theperception of conflict between parties.

Perceptions of the Self

Self-serving evaluations. Negotiators make self-serving attri-butions and evaluations in bargaining (Brandstatter, Kette, &Sageder, 1982; Turnbull et al, 1976). For example, negotiatorswho are unable to reach mutually acceptable agreements blametheir opponent for the failure, whereas they usually attributesuccess to themselves (Brandstatter et al, 1982). This pattern ofresults is consistent with research in other social domains thatsuggests that people make self-serving attributions for successand failure (McFarland & Ross, 1982) and make self-enhancingdownward social comparisons (Wills, 1981).

Overconfidence. Overconfidence in judgment is closely re-lated to self-serving processes and is pervasive in bargaining.For example, Neale and Bazerman (1983) examined negotia-tors' perceptions that an arbitrator would favor their proposalover the proposal suggested by their adversary. The majority ofnegotiators believed that an arbitrator would favor their pro-posal. Neale and Bazerman reasoned that negotiators wereoverconfident when they made probability estimates greaterthan 50% because, on average, negotiators should expect thattheir offer will be selected by a neutral third party about half ofthe time.

Discussion

The cognitive approach is especially appealing because it isan attempt to predict behavior across a broad range of peopleand situations. Another advantage of the approach is that itprovides methodological tools, such as recall and think-aloudmeasures that have proved useful in identifying constructs,measuring variables, and exploring implications of the ap-proach. Finally, the cognitive approach provides conceptuallinks to other social-cognitive theories at different levels of sci-entific analysis. The approach, however, is not complete. Itshares all of the disadvantages associated with more generalcognitive information-processing models (cf. Hastie, 1986) andalso has some unique shortcomings. First, the cognitive ap-proach is still in its infancy. Although this is not a disadvantageper se, a coherent, internally consistent, falsifiable theory of thenegotiator has not been developed, and the approach does notreadily suggest testable implications. Second, the current ap-plication of methodological tools is incomplete. Research meth-odologies often fall short of a thorough information-processinganalysis (Carroll & Payne, in press). Judgment processes andproducts are often inferred on basis of negotiation outcomesrather through direct examination. Some exceptions areCarroll et al.'s (1988) think-aloud study of decision-making pro-cesses in competitive situations and Thompson and Hastie's(1990, in press) think-aloud analysis of judgment error in negoti-

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ation. The aim of information-processing approach is to obtaina "picture" of the negotiator's mind—to understand its pro-cesses and products. In order to accomplish this, it is necessaryto move away from comparing negotiators' behavior with pre-dictions derived from normative models and, instead, focus onthe cognitive processes of negotiators. This approach, of course,requires that researchers include social-psychological measuresin their investigations of bargaining behavior to examine negoti-ators' perceptions.

A unique set of problems arises from the imperfect mappingof cognitive information processing theory onto the study ofnegotiation. One limitation of the cognitive approach is theimpoverished treatment of motivational factors. Although con-cepts of utility, aspiration, and goals are acknowledged, theirrepresentation and relationship to judgment and decisions arenot well specified. This task becomes even more complicatedwhen models posit the existence of goals more complex thansimple economic utility maximization.

An implicit assumption of the cognitive approach is thatmany of the judgment phenomena that occur in individualdecision-making tasks may be extended to the interpersonaltask of negotiation. Consequently, many of the phenomenastudied have been those explored in individual judgment tasks.This reasoning however, constrains the scope of theoreticalanalysis. In extending individual judgment phenomena to nego-tiation tasks, researchers often ignore the interactive nature ofnegotiation. It is assumed that negotiators' perceptions andjudgments are relatively static and do not change as a functionof the influence of the other party. Furthermore, such assump-tions often constrain the focus of analysis: Individual judgmentphenomena that may be easily extended to negotiation situa-tions are most often studied.

Finally, the identification of judgment errors and biases isproblematic. Judgment errors and biases are hypothesized to bethe major cause of ineffective negotiation behavior and subopti-mal outcomes. An analysis of judgment error and bias requiresconsideration of three elements: a judgment, a standard or acriterion of truth, and a rule specifying a correspondence rela-tion between the judgment and the criterion (Hastie & Ra-sinski, 1988). It has been hypothesized that negotiators ignorerelevant information and distort otherwise accurate informa-tion (Carroll et al., 1988). However, it is also possible that negoti-ators may not have the necessary information to make accuratejudgments of the other party because of insufficient or decep-tive information exchange (Pruitt & Lewis, 1975; Thompson, inpress-a). Under such circumstances, it is not appropriate toview inaccuracy as indicative of bias (Funder, 1987).

CONCLUSIONS

Theoretical Issues

It was clear before I wrote this article that normative modelsdo not adequately account for empirical observations of bar-gaining. My argument is that psychological theories of negotia-tion provide the best approach for understanding negotiationbehavior. The descriptive approaches examined in this articleoffer important insights for understanding negotiation, buteach also contains shortcomings and limitations. In this review,

I made clear distinctions among the individual differences,motivational, and cognitive approaches. However, I do notmean to imply that these theoretical approaches are necessarilycontradictory. The approaches focus on different constructs,and few researchers have attempted to pit one approach againstanother. Instead, investigators in recent analyses have at-tempted to integrate these approaches by developing frame-works that include personality, motivation, and cognitive pro-cesses (Bazerman & Carroll, 1987; Neale & Northcraft, inpress). These frameworks are primarily structural and servechiefly to organize the large literature on negotiation ratherthan to derive implications and testable predictions.

The purpose of this article is not to propose a new theory ofnegotiation behavior but to identify the elements and processesthat should be included and the phenomena that must be ex-plained by a psychological theory of negotiation. First, thetheory should be accessible to objective, economic analysis;that is, the theory should provide a way of measuring conceptssuch as the bargaining zone, integrative outcomes, and distribu-tive bargaining outcomes. Second, a theory of negotiationshould explain the perceptual experience of negotiators andtheir judgment processes. The most enduring and robust per-ceptions include the fixed-pie perception, self-serving attribu-tions, and gain and loss frames of reference. Third, a theoryshould explain the relationships between judgment and behav-ior in negotiation, such as those between fixed-pie perceptionsand outcomes and between gain/loss frames of reference andperformance. Fourth, in addition to explaining the correspon-dences between judgment and behavior, the theory should ex-plain discrepancies. Discrepancies occur on the general levelbetween social-psychological and economic measures. For ex-ample, although most negotiators fail to realize that their inter-ests may be completely compatible with those of their oppo-nent, many are able to reach optimal agreements on these issuesanyway (Thompson, 1990, in press-a). Discrepancies also occuron a more local level; for example, aspiration levels affect per-ceptions of reservation price. Finally, motivation and goals areessential ingredients in a theory of negotiation. The fundamen-tal elements of negotiation imply the existence of motivation(e.g, interests, utilities), and aspirations are clearly empiricallyrelated to behavior and performance. In economic analyses,researchers typically assume that negotiators' primary motiva-tion is to maximize their own gain. However, negotiators' goalsare undoubtedly more complex, and they are clearly concernedwith the outcomes of the other party as well as their own (Loe-wenstein et al, 1989; Messick & Sentis, 1985; Schelling, 1960).The theory should provide a way of capturing alternate goals.

The list of theoretical imperatives outlined here is not ex-haustive. The temptation facing theoreticians is to develop con-ceptual frameworks that encompass all the features and charac-teristics of negotiation and apply to several levels of analysis.However, I think that the most powerful theory of negotiationbehavior will begin at the level of the individual negotiator.This view, of course, is most consistent with the information-processing theory that is the basis of the cognitive approachoutlined in this article. In advocating this model as a basis forconstructing a theory of the negotiator, I do not suggest that theinterpersonal aspect of negotiation be ignored. I believe thatthe theoretical task of understanding communication will be

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facilitated once an understanding of the individual negotiator'smind is developed. Also, I do not suggest that the cognitiveapproach is incompatible with motivational and aspirationmodels of behavior. Quite the contrary. As noted earlier, a psy-chological theory of negotiation behavior will need to includemotivational factors as well as social judgment processes.

It may help to clarify the relationship between motivationaland cognitive models if I suggest an illustrative relation. Acurrent theoretical and empirical hole in negotiation researchconcerns how negotiators develop goals in bargaining. In mostof the studies addressing the goal-performance relationship,investigators experimentally manipulate goals by providing ne-gotiators with a performance level to achieve or exceed. In theabsence of performance constraints imposed by experimenters,what determines the goals that negotiators adopt? One hypoth-esis is that negotiators' goals are guided by their judgments ofthe amount of available resources and the other party's inter-ests. Thus judgments influence bargaining aspirations, whichguide behavior. The suggestion that goals guide behavior is notnew; in some of the earliest and most important analyses ofnegotiation behavior, researchers hypothesized that goals guidesearch and behavior (cf. Schelling, 1960; Siegel & Fouraker,1960). What is new about this view is the role of judgment innegotiation and the relationship between judgment and aspira-tions. Researchers have already begun to explore the assump-tions that negotiators bring to negotiation and how perceptionschange during negotiation (cf. Thompson & Hastie, 1990, inpress). The next important step is to explore the relationshipbetween judgments and goals.

Empirical Issues

Examination of the matrix created by the intersection oftheory and research in this review highlights areas that are inneed of development. In general, economic measures of perfor-mance have been used more extensively than social-psychologi-cal measures. I do not suggest that social-psychological mea-sures replace objective analysis; it is important to include bothmeasures in research programs. There are at least three reasonsfor this. First, negotiators typically do not have the informationnecessary to make objective judgments of the bargaining situa-tion; their understanding of the bargaining situation is basedon their perceptions. A "picture" of the negotiator's perceptualexperience seems to be important for a theory of negotiation.Second, it is useful to compare negotiators' perceptions withobjective measures. Some of the most enduring questions inpsychology have to do with the study of accuracy of judgmentand perception (Funder, 1987; Hastie & Rasinski, 1987; Kru-glanski, 1989). Researchers in other domains such as personperception have been forced to rely on indirect methods thatinfer error from subjects' tendencies to rely on "bad cues" andto ignore "good cues" or their failure to match the output of anormative model (e.g., Nisbett & Ross, 1980). Negotiation withits well-defined, objective task structure provides an ideal set ofcriteria from which to examine the accuracy of negotiators'perceptions (Thompson & Hastie, 1990). Finally, negotiators'perceptions are important to examine because they influencebehavior in negotiation (Thompson & Hastie, in press).

Negotiation performance (in terms of economic criteria) is

frequently less than optimal. Although this empirical realitysuggests that the normative model of negotiation does not ful-fill a descriptive function, one can argue that the paradigm onwhich descriptive research is based does not provide an appro-priate testing ground for the economic approach. Simply put,many of the studies that indicate that negotiation behavior andoutcomes are inefficient have been based on examinations ofsingle or one-shot negotiation situations. One argument is thatresearch findings observed in one-shot interactions are trivialbecause inefficiencies are corrected by experience in the mar-ket (Grether & Plott, 1979). Although the precise mechanismby which experience improves performance is not well speci-fied, experience is generally thought to provide individualswith feedback that they can use to correct their judgments (Ho-garth, 1981). However, Einhorn (1980) noted that learning fromexperience is difficult because feedback is often incomplete ordelayed.

This challenge is compelling because many negotiations takeplace not as isolated interactions but as part of a continuousprocess (Carroll & Payne, in press; Hogarth, 1981; Raiffa,1982). A modest but important set of studies has begun toaddress the question of whether people bargain more effec-tively if they gain experience. This research is characterized bythree paradigms: studies of expert negotiators, experimentalbargaining markets, and laboratory negotiation experiences.

Studies of Experts

A widely held view is that experts—people who negotiate fora living—should be better negotiators than are novices. Nealeand Northcraft (1986) compared experts' performance to ama-teurs' performance on an integrative bargaining task. The ex-perts were corporate real estate executives with an average of 10years' experience; the amateurs were students at a state univer-sity. The experts were more successful in reaching integrativeoutcomes in a novel bargaining task than were the amateurs. Ina similar analysis, Scholz et al. (1982) compared professionals(head buyers of West German department stores) with nonpro-fessionals (vocational retraining students) on an integrative bar-gaining task. Professionals resolved conflicts more quicklythan did nonprofessionals but did not differ from them interms of joint outcomes. However, the measures of joint perfor-mance in each study were different; the discrepancy may be afunction of the different dependent variables used in eachstudy. In general, the research on professionals versus novices isscant. One problem with comparisons of professionals withnonprofessionals is the inability to infer a causal relationshipbetween negotiation skill and performance; professionalsdiffer in a number of other ways from novices. As a result, someresearchers have manipulated (rather than measured) experi-ence.

Experimental Bargaining Markets

In market simulations, buyers and sellers are instructed tocomplete as many profitable transactions as they can within ashort amount of time (usually 25 min or less). The only restric-tion is that parties may not interact with the same person morethan once. In market studies, negotiators are essentially clones

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(i.e., all buyers have identical preferences and all sellers haveidentical preferences). The robust finding in market studies isthat negotiation contracts become more integrative over time(cf. Bazerman et al, 1985). However, because all buyers areidentical and all sellers are identical, there exists a given set ofoptimal solutions. Thus one explanation for the improvementsin performance over time is that knowledge of the "best solu-tion" simply spreads through the market. Thus it is unclearwhether negotiators are learning negotiation skills that general-ize across different situations or whether performance is taskspecific.

Negotiation Experience

Thompson (1990) challenged negotiators with several bar-gaining tasks, each requiring unique solutions in order to reachintegrative agreement. Thus in contrast to bargaining marketsin which bargainers negotiate with opponents who all have thesame preferences, one could not reach integrative solutions inThompson's tasks by merely applying the same solution. Negoti-ators engaged in seven bargaining tasks (the high-experiencegroup); their opponents had either no experience or just a singleprevious bargaining experience (the naive group). Logrollingskills improved as negotiators gained experience. Furthermore,negotiators were more successful in logrolling when the naivemember of the bargaining pair had just a single previous experi-ence as opposed to no previous experience, and highly experi-enced bargainers were able to claim a larger share of the re-sources at the expense of their naive opponents. There was animportant caveat on the experience-performance relationship:Experience did not improve negotiators' ability to recognizecompatible issues. At least one negotiator in 71% of all pairsfailed to realize that some interests of the other party wereperfectly compatible with their own; 20% of the pairs reachedsuboptimal outcomes on compatible issues.

In another study, Thompson (in press-b) reasoned that experi-ence may not always have a beneficial effect on performanceand could potentially hinder negotiators' ability to reach inte-grative agreements. Thompson reasoned that negotiators whoengaged in purely distributive negotiations would develop afixed-pie perception of the task. When they are confrontedwith a subsequent integrative negotiation situation, their perfor-mance may be hindered as a consequence of their erroneousexpectation that is based on their experience. The hypothesiswas supported: Negotiators who had experience in tasks withlogrolling potential performed better in a subsequent logrollingtask than did negotiators whose initial experience was in a dis-tributive task.

The purpose of this article has been to address the importantempirical and theoretical issues in negotiation research. Be-cause negotiation behavior is a fundamental form of social in-teraction, it is a major area of research in several fields. A num-ber of perspectives that attempt to predict behavior and perfor-mance have emerged, and a number of performance criteriahave been identified to measure performance. In this article Ihave identified some important factors that predict negotiationbehavior and performance and some theoretical issues for fu-ture research.

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Received March 14,1989Revision received February 20,1990

Accepted March 20,1990 •