Losses and Lies: The Effects of Framing on Negotiator Ethics

Abstract

We find that negotiators behave less ethically when they perceive the outcome of the negotiation to be a potential loss instead of a potential gain. Furthermore, negotiators assess the outcome of the negotiation to be more important and the future relationship with the other party to be worse, in the loss condition. We tie these findings to the deep literature on Prospect Theory and the nascent literature on behavioral ethics.