information and compet i t ivencess of incentive structure a s fac tors in t w o - p e r s o n negotiat ion"

HELMUT LAMM EKKEHARD ROSCH

Universitat Mannhein

This study was designed to investigate two-person negotiation behavior as a function, firstly, of the competitiveness inherent in the task conditions. A competitive condition will be said to exist when, by the rules of the game, there is a prize attached to winning. It is hypothesized that under such competitive conditions negotiations will be tougher. Schoeninger and Wood (1967) failed to confirm that prediction. The present study uses a somewhat different. and presumably stronger, manipulation.

Secondly. it was intended to investigate the effect on negotiation of the level of information possessed by a negotiator concerning the value (in money) which any particular agreement (or contract) has for the opposite party. Siege1 and Fouraker (1960) found that negotiators agreed on more equal shares when they mutually had information than when they did not, a result which is predictable by equity theory (Adams, 1965) The present study. beside a full-information and a no-information condition. includes an unreliable-information condition: The receiver cannot be sure that the information presented by his opponent is accurate: his belief in its validity depends on his trust in his opponent. It was intended to explore whether negotiations under unreliable information would come out more like those under full information or more like those under no information.

Of particular interest is the role played by the competitiveness factor as a possible moderator of the effect of information. Since one of the concomitants of a competitive situation is distrust (see Deutsch. 1969). it can be predicted that the dyads with un- reliable information will behave like no-information dyads particularly under competitive conditions. It is predicted that negotiations will be toughest in the competitive, un - reliable-information condition. since the distrust prevailing there will foster or enhance negative mutual dispositions. with the result of less willingness to make concessions.

* Conducted at the Sonderforschungsbereich Forschun,os,oemeinschaft. The second author's fur sozial- iind wirtschaftspsychologische Diplorn-thesis a t the University of Mann- Entscheidun_esforschun~. UniversitPt Mann- heirn was based on this experiment. heini. with financial aid from the Deutsche

460 Helmut Lamm and Ekkehard Rosch

Method

Sub jects

Seventy-two male upper-class high school students (36 dyads) participated in the ex- periment. They were promised 7 Deutsche Mark, plus addition possible winnings. for their participation.

Negotiation task

The task was an adaption of the game described in Kelley, Beckman, and Fischer (1967). On each trial, the two participants’ task was to reach an agreement. within three minutes, on the distribution of nine units among each other. A signal was given at 30 seconds before the deadline on, each trial. A player’s profit consisted of his agreed-upon share, minus his ‘cost’ component assigned by E in the form of a ‘cost card’ at the beginning of the trial. (Ss were told that the cost level could vary from 1 to 7 and that, over all trials, the total cost level would be the same for both). Each profit point would be worth 1/10 Deutsche Mark, to be received in cash at the end of the experi- mental session. There were 24 trials in all. The negotiations were conducted via the display of pre-printed communication cards, each containing either a distribution proposal or one of 20 messages (e.g., ‘Help me this time - 1’11 help you later’; ‘lower your demand, or I’ll break off‘). No discussion was allowed.

Independent variables

Competitiveness In the comperirive condition. Ss were told that the player with the higher number of profit points at the end of the trial series would receive one Deutsche Mark for each profit point by which he surpassed his opponent. In the non-comperitivr condition, no such instructions were given.

Information In the full information condition (12 dyads). E presented the cost cards in such a way that each player could see his own as well as his opponent’s cost card. In the itnrelinble information condition (12 dyads). each player was presented only with his own cost cards but was instructed to communicate to the other (by noting down on a message card) what his cost was at the beginning of each trial. Showing the opponent one‘s original cost card was not permitted. Thus a player could not receive full validation of the cost message received from his opponent: in particular, he could not check whether the opponent had exagzerated his cost. In the no-information condition (12 dyads). no direct information could be exchanged concerning one’s cost level.

Information and competitiveness o f incentive structure 46 1

Design

The design was a 2 X 3 factorial, with competitiveness as a within-subjects factor. In each of the three information conditions, six dyads played first under non-compe- titive (12 trials) and then under competitive (12 trials) conditons; for the other six dyads the order was reversed.’ Beside appropriate analyses of variance, Duncan multiple range tests were used to test for differences among any of the three information con- ditions.

Results and discussion

Effects of competitiveness

Under competitive, as compared to non-competitive conditions, (a) there was a larger volume of communications (p <.025), (b) negotiations lasted longer (p < .01),2 (c) negotiations were broken off more frequently (p < .Ol),3 and (d) players’ total profit was lower (p C -05).

Thus, negotiation was indeed tougher under competitive than under non-competitive conditions. This result is not surprising, as it can be predicted on the assumption that Ss behave so as to maximize their individual profits (and hence are more resistant to making concessions in the competitive condition). What is notable is the fact that a substantial number of negotiators in the competitive condition preferred a non-profit outcome (break-off) for themselves to a n agreement that could yield the opponent additional winning points or that could decrease their own winning margin, the result being a worse total profit for the losers in the competitive condtion relative to the average total profit in the non-competitive condition. Future research should investigate how negotiators can avoid such detrimental effects of an imposed competitive situation.

Ef fec ts of information

Under full information, as compared to the conditions of unreliable and of no in- formation, (a) the relative initial demand (share demanded by a negotiator, minus his cost on any given trial) was smaller ( p < .05 and .01, respectively), (b) the volume of communications was smaller ( p < .05), and (c) the within-dyad difference in total profit was smaller, i.e., the distribution was more equal @ < .05).4

Thus, negotiators under unreliable information behaved as if they had no information

1. Actually, this balanced order as well as the order of cost cards entered into the anal- ysis of variance as additional factors. 1. Tests of ‘simple effects’ showed tha t this main effect is attributable entirely to the tiple range tests. high-low order of competitiveness.

3 . Tests of ‘simple effects’ showed that this main effect is attributable mainly to the low- high order of competitiveness. 4 . These p values are based on Duncan mul-

462 Helmut L a m m and Ekkehard Rosch

at all. In both conditions negotiators were initially tougher than in the full-information condition, but they were able (by communicating more) to reach mutual accomodations (e.g., avoiding break-offs) so as to obtain the same total profit as negotiators in the full-information condition. It appears that in the unreliable-nformation condition the disruptive effect of distrust was avoided by a negotiator’s discarding altogether the opponent’s statement concerning his cost quantity. (This assumption also would explain why we did not find the hypothesized interaction between competitiveness and in- formation.)

The larger within-dyad difference in profit in the unreliable and no-information con- ditions was due to the fact that the prominent equal division solution was less availablc and thus could not act as a constraint. Under these circumstances, personality (e.g., dominance needs, risk-taking propensity) could have a greater and more sustained effect (see Harnett, Cummings, and Hughes, 1968). Thus, in the absence of feedback concerning one’s opponent’s real profit, the negotiation patterns displayed in the initial trials (e.g., relatively high demand by A, relatively low demand by B) could have a cumulative effect through the whole trial series.

REFERENCES

Adarns, J. S. (1965) Inequity in social ex- change. In: L. Berkowitz (Ed.j, Adi,ai i - ces if1 experinietirul social p s y c l i o i o ~ ~ , 1’01. 2 , S e a . York, Academic Press.

Deutsch. hl. (1969) Conflicts: Productive and destructive. 1. .wc. Issues, 2 5 . 29-3 1 .

HJrnet t . D. L., Curnmings, L. L., and Hughes, G . D . (196:~) The influence of risk- taking propensity on bargainin: behav- ior. B e / ! . Scier:ce, 13, 91-101.

Kelley, H. H., Beckman, L. L., and Fischer, C . S. (1967) Negotiating the division of reward under incomplete information. I . exper . SOC. Psyciiol., 3, 361-396.

Schoeninger, D. W., and Wood, W. D. (1969) Comparison of married and ad hoc mixed-sex dyads negotiating the division of reward. 1. exper . soc. Psyc/iol., 5 , 483-499.

Siegel, S., and Fouraker , L. u’. (19601 Bar- p a i f i i n g and group decision rnaki f lg . s e w York. McGraw-Hill.