Direct and Representative Negotiation: A Principal-Agent Authority Continuum

Neil E. Fassina
University of Toronto – Rotman School of Management
IACM 15th Annual Conference

Abstract:

Principal-agent research often describes a dichotomous choice between direct and representative negotiation. The result is a list of independent context specific contingencies that provide principals with little guidance when considering whether it is appropriate to appoint a negotiation agent. A normative decision framework is developed to synthesize the current empirical and theoretical understandings of how best to manage an agent?s participation in negotiations. The framework outlines seven conditions intended to determine whether a negotiation context warrants the appointment of an agent. Each question is discussed using both empirical and theoretical rationale. The framework also proposes a continuum of negotiation authority possibly transferred to an agent from a principal for an optimal settlement. The authority continuum is bounded by completely direct and completely representative negotiation situations. Theoretical and practical implications of the framework are discussed.

Direct and Representative Negotiation- A Principal-Agent Authority Continuum

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