Mental Accounting for Negotiation and Exchange

Abstract

Complex negotiations occur within a broader stream of ongoing social exchange, but negotiation research focuses on narrowly circumscribed encounters. Building on Trivers’ model of reciprocal altruism and Thaler’s theory of mental accounting, we propose a model of a negotiator who opens and updates ‘relational accounts’ that regulate social exchange. The accounts generate particular emotional response profiles forming the basis for social motives to compete, cooperate, or self-sacrifice. In one study we manipulated Thaler’s mental accounting scenarios to test whether these emotional responses mediate the impact of specific social events on social motives. Having found evidence for this mediation, we ran a second study testing whether social motive mediates the impact of specific events on the vigor with which a party implements the terms of a negotiated agreement. Evidence for this mediation helps to fill a significant gap in our current understanding of the implementation process. Implications of mental accounting for the development of a general, multi-level behavioral theory of negotiation are considered.