Integrative bargaining in a competitive market |
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Authors: | Max H. Bazerman Thomas Magliozzi Margaret A. Neale |
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Affiliation: | Massachusetts Institute of Technology USA;Boston University USA;University of Arizona USA |
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Abstract: | The behavioral decision theory literature was used to identify the determinants of negotiation success in an integrative bargaining, free-market exercise. This study provides a novel methodology for studying negotiation. Specifically, buyers and sellers were allowed to engage in negotiations with as many competitors as possible in a fixed time period. The results suggest that integrative bargaining behavior increases and the market converges toward a Nash equilibrium as negotiators gain experience. In addition, the results suggest that (1) positively framed negotiators (“What will be my net profit from the transaction?”) complete more transactions than negatively framed negotiators (“What will be my expenses on this transaction?”), (2) negotiators who are given moderately difficult profit constraints in order to be allowed to complete a transaction achieve more profitable transactions than negotiators without such constraints, and (3) both framing and the existence of constraints affect the total profitability of the negotiator. |
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Keywords: | All correspondence and requests for reprints should be sent to Max H. Bazerman E52-562 Sloan School of Management Massachusetts Institute of Technology Cambridge MA 02139. |
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