Decision frames and the social utility of negotiation outcomes

Author(s): Mara Olekalns [sup.1] , Philip L. Smith [sup.2] Author Affiliations: (1) grid.1008.9, 0000 0001 2179 088X, Melbourne Business School, The University of Melbourne, , 200 Leicester St, 3053, Carlton, [...]
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.