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Decision frames and the social utility of negotiation outcomes

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Abstract

Using a simulated negotiation, we test how negotiators’ decision frames (gain vs loss) influence their social utilities. Recognizing that utilities are shaped by both economic and social concerns, we measure four attributes of negotiator satisfaction: satisfaction with own economic outcomes, satisfaction with self, other’s satisfaction with outcome, and other’s willingness to negotiate in the future. Drawing on Prospect Theory and modifications of Prospect Theory, we tested whether decision frames showed the same relationship between outcomes and satisfaction on all measures of satisfaction, or whether this relationship was context-sensitive. Our first set of models, which used individual outcomes and outcome differences to predict satisfaction, demonstrated that the relationship between decision frames and satisfaction is context sensitive. Across the four attributes of satisfaction, gain-framed negotiators were more sensitive to equity and advantageous inequity than loss-framed negotiators whereas loss-framed negotiators were more sensitive to disadvantageous inequity than gain-framed negotiators. Our second set of models, which predicted satisfaction from individual and joint outcomes showed that, across all attributes of satisfaction, loss-framed negotiators were more sensitive to changes in joint outcomes than gain-framed negotiators. Finally, we showed that negotiators maximized their outcomes when they engaged in moderate levels of competition (offers, positional arguments). For gain-framed negotiators, an improvement in outcomes was associated with a reduction in competitiveness whereas for loss-framed negotiators an improvement in outcomes was associated with an increase in competitiveness.

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Notes

  1. The issue of statistical power has remained a matter of concern in face-to-face tasks using even moderately-large sized samples of participants, like the one in our current study. Recent debates about replicability have tended to conflate questions of statistical power – whether calculated a priori using conventional definitions of effect sizes, or post hoc from the effects actually measured in the study – with whether observed experimental effects are real or not. Hoenig and Heisey (2001) and Gelman (2019) have highlighted the statistical fallacy in inferences based on post-hoc power calculations and argued persuasively that they provide no information about the reality of experimental effects. A priori calculations of power do not embody the same fallacy, but the conventional definitions of effect sizes on which they are based tell us nothing about the true size of an effect in which a researcher may be interested theoretically or the likelihood of finding it using a particular sample size, if it exists. Vandekerckhove et al. (2019, p. 275) summarized the situation by commenting “The misconception that the expected informativeness of a study (sometimes expressed in a prospective power analysis) as indicative of the actual informativeness of the study as realized … is sometimes termed the power fallacy.” Our view, following that of Vandekerckhove et al., is that significant effects should be taken at face value and interpreted as such. Hypothesized effects that are found to be nonsignificant should be interpreted, with due caution, in the light of the power of the experimental design.

  2. We originally designed this experiment as a 2(Decision Frame) × 2(Regulatory Focus) experiment. The Regulatory Focus manipulation was embedded in the instructions (Brockner and Higgins, 2001; Galinsky et al., 2005). Prevention-focused negotiators’ instructions were written to emphasize their obligations, the need to protect themselves and negotiate cautiously, and to be aware of the potential obstacles to obtaining an outcome. Promotion-focused negotiators instructions were written to emphasize their aspirations, the need to pursue all available opportunities and to approach the negotiation with optimism. Participants were asked whether they were more focused pursuing every opportunity for a good outcome or protecting themselves from a bad outcome. Although our analysis indicated that a significant number of participants correctly identified their primary, χ2(1) = 4.93, p = 0.026, a substantial number reported their focus incorrectly. For this reason, we collapsed data across the Regulatory Fit manipulation and included it as a covariate in our analyses.

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The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

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This research was funded by Discovery Grant DP1093256 from the Australian Research Council.

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Correspondence to Mara Olekalns.

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Olekalns, M., Smith, P.L. Decision frames and the social utility of negotiation outcomes. Curr Psychol 42, 9563–9576 (2023). https://doi.org/10.1007/s12144-021-02248-8

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