What we think we know about human behavior during negotiations derives from an overwhelming volume of research studies grounded in a wide range of disciplines.  For example, the central point of Daniel Kahneman and Amos Tversky’s remarkably influential 1979 article in the journal Econometrica, Prospect Theory: An Analysis of Decision Under Risk on Prospect, has become a staple of our understanding regarding how negotiators perceive certain gains or losses compared to probabilistic gains and losses in negotiations:  Typically, for example, a defendant would prefer to proceed to trial when the expected cost of doing so is greater than the certain cost of settling in mediation/negotiation prior to trial.  In contrast, the typical plaintiff would prefer settling for a certain sum as opposed to proceeding to trial where the expected economic gain from doing so exceeds that certain sum.

One might be tempted to think, particularly in negotiations focused on the potential settlement of a civil lawsuit, that instrumental value is all that matters to the respective parties:  The plaintiff seeks to get as much as she can, albeit lower than her expected recovery if she were to proceed to trial.  The defendant seeks to pay out as little as possible in the form of a certain sum, but less than the expected payout if the case were to proceed to trial.  A 1990 article by Leigh Thompson in the journal Psychological Bulletin, titled Negotiating Behavior and Outcomes: Empirical Evidence and Theoretical Issues, set in motion a research stream that expands upon our understanding of what negotiators care about in negotiations.  In short, the typical negotiation is not all about the money.

A 2006 article in the Journal of Personality and Social Psychology, What do people value when they negotiate?  Mapping the domain of subjective value in negotiation, builds on the  work of Leigh Thompson and others.  In the 2006 article, Jared Curhan and his co-authors demonstrated that, for example, how negotiators feel about the negotiation process matters to them.  For example, what was the nature of the interactions between the negotiators?  Did they feel respected by their counterparty during the negotiation? Did they feel that the counterparty took their expressed concerns/interests seriously?  Did the negotiators conclude that they could trust their counterparty?  Or, did the negotiators conclude that their counterparty was seeking purely maximum instrumental gain through, for example, lack of candor?  In short, the perception of the quality of the negotiation process has value for negotiators in addition to the obvious instrumental value that characterizes civil litigation.

The voluminous scholarship that tells us what we know about human behavior in negotiations did not develop during a period of severe economic contraction.  No one points to negotiation scholarship from the Great Depression.  Consequently, we know very little about how true existential uncertainty generated by what appears to be a Black Swan of global proportions might affect negotiating behavior. We do know, however, that before today, under what we had come to regard as ordinary life, subjective value is important to negotiators.  It seems worth pondering whether during a severe public health/economic crisis several magnitudes beyond anything in the life experience of most negotiators today, subjective value takes on greater importance than it might have before the arrival of the current Black Swan. It seems not farfetched to imagine that, for example, treating each other with an enhanced level of respect and showing greater empathy towards one another during a negotiation today can have greater subjective value for the parties than would be true during ordinary times.

Leave a Reply

Your email address will not be published. Required fields are marked *