The Effect of Past Performance on Expected Control and Risk Attitudes in Integrative Negotiations

Abstract

AbstractThree experiments examine the relationship between past performance and strategies and risk attitudes in integrative negotiations. We hypothesized that past performance would affect negotiators’ willingness to embrace two types of risk: strategic (i.e., information sharing in the present) versus contractual (i.e., uncertainty about the future). Consistent with the hypothesis that past success promotes strategic risk taking, dyads with a history of success were more integrative than dyads with a history of failure in Experiment 1. In Experiment 2, we demonstrated that past performance impacts intentions regarding these two types of risk. Specifically, due to lower expected control over the negotiation process, past failure led negotiators to prefer a contractual risk strategy over a strategic risk strategy. In Experiment 3, we explored one implication of this tendency by showing a greater willingness of past failure negotiators to enter into a contingent agreement, which delays the outcome of the deal until a future point in time. Together these findings indicate that past performance influences not only the amount of risk negotiators assume but also the type of risk they are willing to embrace.