The Effect of Framing and Power Imbalance on Negotiation Behaviors and Outcomes

Summary Negotiation can be defined as a joint decision making process where two or more parties are trying to inuence the other about the allocation of resources or division of gains for the purpose of achieving own or mutual interests [2]; [16]. Negotiators often fail to reach Pareto optimal solutions when there is integrative potential that expand the pie and yield higher joint outcomes [2]; [16]; [19]. Literature showed that framing of conicts and power relations are two widely acknowledged factors that affect the negotiation process and outcomes. According to Emerson \the power of A over B is equal to and based upon the dependence of B upon A" [7]. The power imbalance empirically manifests when high-power and low-power parties initialize a supply-demand relationship in which these demands are contradictory to supplier‘s desires [7]. Nevertheless, decision makers -therefore negotiators- systematically violate the requirements of rational choice and deviate from rationality because of imperfections of human perception and decisions [9]; [14]; [18]. One of the hidden traps in decision making is reference framing which was first introduced by Prospect theory [9]; [18]. It is proposed that people normally perceive outcomes as gains and losses rather than final states of outcomes and valuation of any outcome, defined as gains or losses, depends on its location relative to the reference point which is assigned a value of zero. Further, they stated that people are more risk averse for positive but risk-seeking for negative outcomes. Thus, the way a problem is framed can dramatically inuence our choices