Negotiating Risks : Sources of Uncertainty and the Impact of Reference Points on Concession-Making and Settlements

The reference points negotiators use to evaluate outcomes have a dramatic influence over concession-making and agreements. However, the conventional finding that low reference points Induce more concessions and fewer impasses is limited to situations with deterministic payoffs. Indeed, the impact of framing 15 virtually reversed when parties negotiate under uncertainty. Two experiments demonstrate these relationships in varied contexts. In such cases, negotiators seeking cooperation should frame their counterpart's outcomes as losses rather than gains. These findings also resolve a theoretical question by demonstrating that reference dependent shifts in risk attitude are essential to a descriptive theory of bargaining