Are Negotiators Overly Optimistic after All? It Depends on the Question and the Negotiation Structure

Edward Eli Kass
University of San Francisco; University of California, Berkeley – Haas School of Business

16th Annual IACM Conference Melbourne, Australia

Abstract:

Some studies suggest that negotiators are overly optimistic (Bazerman & Neale, 1982; Neale & Bazerman, 1983, Thompson 1988, Kramer, Newton, & Pommerenke, 1993) while others suggest they are pessimistic (Kass 2002). This study suggests that the type of performance judgment used in past studies accounts for these seemingly contradictory findings. This study invokes the fixed pie bias to predict that negotiators show undue optimism when predicting distributive performance and undue pessimism when predicting integrative performance. To investigate this model, negotiators engaged in either a purely distributive or integrative negotiation and predicted their performance relative to the other party (inherently zero-sum) and in absolute terms (zero-sum for negotiators engaged in a zero-sum negotiation and integrative for negotiators engaged in an integrative task). Negotiators exhibited undue optimism when predicting performance relative to others regardless of negotiation condition. When predicting performance in absolute terms, negotiators exhibited marked overconfidence when engaged in zero-sum tasks but exhibited marked undue pessimism when engaged in integrative ones. This study also predicted and found that judgments of relative performance constrain indices of overconfidence and undue pessimism relative to absolute performance judgments.

Are Negotiators Overly Optimistic after All? It Depends on the Question and the Negotiation Structure

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