Disconnecting Outcomes and Evaluations: The Role of Negotiator Reference Points

Abstract:     
Two experiments explored the role of reference points in disconnecting objective and subjective utility in negotiations. Negotiators who focused on their target prices, the ideal outcome they could obtain, achieved objectively superior outcomes compared to negotiators who focused on a minimum goal, their best alternatives to the negotiation (BATNAs). Those negotiators who focused on their targets, however, were less satisfied with their objectively superior outcomes. In the final experiment, when negotiators were reminded of their minimum goal before filling out the satisfaction measure, the satisfaction of those negotiators who had focused on their targets was increased, with outcomes and evaluations becoming connected rather than disconnected. The possible negative effects of setting high goals and the potential future consequences of this reference-point induced disconnection between outcomes and evaluations are discussed.

Keywords: Negotiations, disconnecting outcomes and evaluations, goals

Working Paper Series