1. Another Negotiator’s Dilemma: Shoot Straight or Act Deceptively Against a Counterpart with a Bad Reputation
Jeff Schatten
Ed Miles

2. Agenda
Background Deception in Negotiation Why Equity Theory Matters? Why Prisoner’s Dilemma Matters?

3. Agenda
Background Deception in Negotiation Why Equity Theory Matters? Why Prisoner’s Dilemma Matters?

4. Background

5. Agenda
Background Deception in Negotiation Why Equity Theory Matters? Why Prisoner’s Dilemma Matters?

6. Deception
Average person tells between one to two lies per day (Depaulo et al., 1996)
High stakes negotiations- deception in over 55% of negotiations (Aquino & Becker, 2005)
Found in:
labor negotiations, corporate mergers, salary negotiations and global climate change negotiations (Ma & Parks, 2012).

7. When Deception is Detected
Detrimental to trust and negotiation outcomes (Olekalns & Smith, 2009).
Anger and retribution (Boles et al., 2000)

8. What explains deception?
Negotiator Characteristics
Low trust (Olekalns et al., 2014)
High anger (Tenbrunsel, 1998)
Lack of guilt (Reudy et al., 2013)
Negotiation Characteristics
Outcome uncertainty
(Schweitzer et al., 1999)
Negotiating against a group
(Lewicki et al., 1997)
High stakes (Tenbrunsel, 1998)
Counterpart Characteristics
???

9. Reputation Reduce the uncertainty of other’s behavior (Spence, 1974).
Cognitive shortcut in assessing the totality of another person (Origgi, 2012).
Professor reputation before a course begins predicts student evaluation of the professor (McNatt, 2010).
Research literature understands “very little about the dynamics of reputations’ influence on negotiation” (Tinsley et al., 2002).

10. Reputation, in Short…
You know that the possibility of deception exists. You look for cues that it might happen. Reputation is a key cue when others are either unknown or uninterpretable.

11. A Very Abbreviated Model
Principal belief that counterpart is unfair
Counterpart
Reputation
Principal use of Deception

12. Agenda
Background Deception in Negotiation Why Equity Theory Matters? Why Prisoner’s Dilemma Matters?

13. Equity Theory
Balancing the ratio of inputs and outcomes so that they are fair in comparison to other individuals (Adams, 1963).
i.e. quality of work, effort, time spent, etc.
i.e. payment, office location, job title, etc.

14. Equity Theory Desire to limit psychological tension (Festinger, 1957).
Restoring equity -> decrease in felt tension (Harder, 1991).
Restore equity- harming the “responsible” party (O’Leary & Dengerink, 1973).
Injustice -> counterproductive work behavior, such as theft (Hollinger & Clark, 1983).

15. Equity Theory
Negotiator’s evaluate their own inputs and outputs and measure that against a counterpart’s inputs and outputs (Thompson & Lowenstein, 1992)
Deception fundamentally alters the balance of counterpart input and output (Gino & Pierce, 2009)
This might lead to perceptions of unfairness

16. Proposition 1
Proposition 1: Principals negotiating against counterparts with a negative reputation are more likely to view their counterpart as an unfair negotiator than are principals negotiating against counterparts with a neutral reputation.

17. Agenda
Background Deception in Negotiation Why Equity Theory Matters? Why Prisoner’s Dilemma Matters?

18. Prisoner’s Dilemma Examples include (Rasmusen, 1990):
Oligopoly pricing
Auction bidding
Political bargaining
Arms races

19. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Prisoner A betrays (defects)

20. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A betrays (defects)

21. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A betrays (defects)
Prisoner A: goes free

22. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A betrays (defects)
Prisoner A: goes free
Prisoner B: 3 years

23. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A: 3 years
Prisoner B: goes free
Prisoner A betrays (defects)
Prisoner A: goes free
Prisoner B: 3 years

24. Prisoner’s Dilemma Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A: 3 years
Prisoner B: goes free
Prisoner A betrays (defects)
Prisoner A: goes free
Prisoner B: 3 years
Each serves 2 years

25. Prisoner’s Dilemma Integrative Outcomes
Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
(Best case)
Prisoner A: 3 years
Prisoner B: goes free
(Second best)
Prisoner A betrays (defects)
Prisoner A: goes free
Prisoner B: 3 years
Each serves 2 years
(Worst case)

26. Prisoner’s Dilemma w/ my wife
Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Each serves 1 year
Prisoner A betrays (defects)

27. Prisoner’s Dilemma w/ my mutual enemy
Prisoner B stays silent (cooperates)
Prisoner B Betrays (defects)
Prisoner A stays silent (cooperates)
Prisoner A betrays (defects)
Each serves 2 years

28. Negotiator’s Dilemma
Compete vs Cooperate
Lax and Sebenius, 1985

29. Another Negotiator’s Dilemma
Counterpart is honest (cooperates)
Counterpart deceives (defects)
Principal is honest (cooperates)
Pareto Optimality
Counterpart: high distributive outcomes
Principal: low distributive outcomes
Principal deceives (defects)
Principal: high distributive outcomes
Counterpart: low distributive outcomes
Low integrative Outcomes

30. Another Negotiator’s Dilemma w/ counterpart with a bad reputation
Counterpart is honest (cooperates)
Counterpart deceives (defects)
Principal is honest (cooperates)
Counterpart: high distributive outcomes
Principal: low distributive outcomes
Principal deceives (defects)
Low integrative Outcomes

31. Proposition 2: Principals who negotiate with a counterpart with a negative reputation will be more likely to use deception than principals who negotiate with counterparts with a neutral reputation.

32. Back to Vinny…..

33. Thank You!