The Balance of Power: Effects of Role and Market Forces on Negotiated Outcomes1

Role and market forces provide two sources of power that affect negotiated outcomes. To test their effects, 48 subjects participated in one of two negotiation markets that favored either buyers or sellers. Profit was influenced by both power sources: Buyers outperformed sellers, and negotiators in a favorable market outperformed negotiators in an unfavorable market. This effect was shown to be additive, indicating that the effects of the two sources of power were independent of one another. Whereas negotiators advantaged by market forces showed increases in profit over time, profits for negotiators disadvantaged by the market remained stable. Joint profit rose throughout both markets. However, this did not reflect increasing integrativeness in the markets; rather, the increase could be attributed to increases in high power negotiator profits. Markets became more distributive over time, and both the effectiveness and efficiency of bargaining decreased, particularly in the market favoring buyers.