Countering Negotiation Power Asymmetries with the Adjusted Winner Algorithm?
19 Pages Posted: 9 Apr 2011
Date Written: March 7, 2011
Despite considerable interest in the improvement of negotiation results, commercial negotiations rarely follow formal negotiation procedures. This study investigates the relationship between bargaining power shift and success in a formalized negotiation experiment. Results of an experiment that addresses issue authority as a proxy of bargaining power show that differences in issue authority allocation significantly affect negotiation success. In scenarios with substantial differences in bargaining power, particularly female and mixed dyads failed to achieve a mutually satisfactory result. This study investigates whether mathematical negotiation procedures will guide the parties to an efficient negotiation result and thus dilute these differences. Results show that (a) an increase in issue authority for one of the two parties does not necessarily lead to an increase in negotiation efficiency and (b) the use of mathematical formal negotiation procedures eminently improves the results and helps to overcome the difficulty of unsatisfying results. These differences demonstrate that bargaining power in commercial negotiations does not compensate for insufficient negotiation skill or effort. On the contrary, unbalanced bargaining power decreases the likelihood of success.
Keywords: Power and Status in Conflict, Negotiation Processes, Games and Social Dilemmas
JEL Classification: C7
Suggested Citation: Suggested Citation