Non-linear Preference Functions and Negotiated Outcomes

The study described in this paper explored the effects of non-linear preferences on negotiated settlements. The shape of negotiators' preferences (linear, increasing marginal utility, or decreasing marginal utility) was hypothesized to influence negotiated outcomes. Prior relationship between the negotiators (friends versus strangers) was hypothesized to moderate the effects of negotiators' preferences on negotiated outcomes by virtue of the influence of prior relationship on communication effectiveness within the negotiation dyad. Subjects participated in a buyer/seller negotiation role play. Results demonstrated a strong main effect for negotiators' preferences on negotiated outcomes. Results also supported a moderating role for prior relationship on these effects; this moderating role was not accounted for by communication effectiveness. Implications of these results for negotiation theory and practice are discussed.