The Negotiation Matching Process: Relationships and Partner Selection

We present 3 studies that examine the process of partner selection in negotiations and the influence that relationships may have on the partner-selection decision. In Study 1, we present a simulated matching market experiment in which we compare the matching process when relationships can influence the partner-selection decision with the matching process when relationships cannot influence this decision. We find that when relationships are not allowed to influence the matching process, there are more economically optimal agreements, a larger market surplus, and more search activity. In Study 2, a simulation of a naturally occurring market selection process provides additional quantitative support for the findings from Study 1 and offers qualitative data on the reasoning process behind partner selection, including the social factors that are influential in this decision. Study 3 utilizes a repeated trial experimental simulation to offer further support for the negative relationship between relationships and economic outcomes and to suggest that the relative power of the negotiators influences the extent to which relationships help versus hurt individual profitability. Implications of these findings are discussed.