The effects of negotiation and arbitration cost salience on bargainer behavior: The role of the arbitrator and constituency on negotiator judgment

Abstract

Recent literature reports a reliance on third-party intervention procedures in contract negotiation. This study suggests that the relative evaluation of the costs related to arbitration (such as the uncertainty and expense of arbitration), and the costs related to negotiation (such as loss of face or perceived incompetency) provide a partial explanation for the increasing frequency of the negotiator's use of arbitration procedures rather than reaching a negotiated settlement. The relative salience of negotiation-related costs (high and low) and the relative salience of arbitration-related costs (high and low) were manipulated in a 2 × 2 design, involving 147 subjects negotiating a five-issue contract. The results were consistent with the hypothesized relationships. Implications of the results of this study for improving the understanding of and control over negotiator behavior are discussed.