Integrative Bargaining in a Competitive Market: September 1983

Excerpt from Integrative Bargaining in a Competitive Market: September 1983
The behavioral decision theory literature was used to identify the determinants of negotiation success in an integrative bargaining, free market exercise. This study provides a novel methodology for studying negotiation. Specifically, buyers and sellers were allowed to engage in negotiation with as many competitors as possible in a fixed time period. The results suggest that integrative bargaining behavior increases and the market converges towards a Nash equilibrium as negotiators gain experience. In addition, the results suggest that (1) positively framed negotiators ("what will be my net profit from the transaction?") complete more transactions than negatively framed negotiators ("what will be my expenses on this transaction?"), (2) negotiators who are given moderately difficult profit constraints in order to be allowed to complete a transaction achieve more profitable transactions that negotiators without such constraints, and (3) both framing and the existence of constraints affect the total profitability of the negotiator.