Social perception in negotiation

Many negotiations provide opportunities for integrative agreements in which parties can maximize joint gains without competing for resources in a direct win-lose fashion. However, negotiators often settle for suboptimal compromise agreements rather than search for mutually beneficial, or integrative, agreements. We hypothesized that misperceptions of the other party's interests are a primary cause of suboptimal outcomes. Two studies examined the role of social perception in negotiation and the relationship between judgment accuracy and negotiation performance. Results indicated that: most negotiators enter negotiation expecting the other party's interests to be completely opposed to their own; negotiators learn about the potential for joint gain during negotiation; most learning occurs within the first few minutes of interaction; accurate perception of the other party's interests leads to better negotiation performance; negotiators who learn about the other party's interests in the early stages of negotiation earn higher payoffs than do those who learn during the later stages of negotiation; a substantial number of negotiators fail to realize when they have interests that are completely compatible with those of the other party and settle for suboptimal agreements; and the two types of judgment error, Fixed Sum Error and Incompatibility Error, appear to be unrelated, distinct judgment errors. We discuss the role of social judgment in negotiation and the generalizability of the results to real world negotiations.