Effects of Gain-Loss Frames in Negotiation: Loss Aversion, Mismatching, and Frame Adoption

Abstract

Extending research and theory on negotiator frame - the conceptualization of outcomes as gains or as losses - this study assumes that (a) negotiators often have foreknowledge about their opponent′s gain or loss frame, and (b) during negotiation, disputants often communicate about their own frame. We considered negotiator cognition and behavior as a function of own frame, foreknowledge about opponent′s frame, opponent′s communicated frame, and their interactions. As predicted, the opposing negotiator was perceived as more cooperative under other′s loss than gain frame. Further, negotiators mismatched their opponent′s concessions, in that they made smaller concessions when the adversary had a loss rather than gain frame. Results also supported the "frame-adoption hypothesis" that other′s communicated gain frame leads to lower demands and larger concessions than other′s communicated loss frame, especially when negotiators have a gain rather than loss frame themselves. As predicted, this frame-adoption effect was attenuated when other′s communicated frame was incongruent rather than congruent with the information about other′s frame. Together, these findings underscore the relevance of considering negotiator frames from an interpersonal perspective.