1. Janice Kuo, Pepperdine University of Law, January 2010
FROM SELF-PREDICTION TO SELF DEFEAT: Behavioral Forecasting, Self-Fulfilling Prophecies, and the Effect of Competitive Expectations
Janice Kuo, Pepperdine University of Law, January 2010

2. WHAT EFFECTS DO COMPETITIVE EXPECTATIONS ABOUT AN OPPONENT HAVE ON A NEGOTIATION?
How do negotiators, when faced with a competitive opponent, think they would behave in a negotiation?
How do negotiators, when faced with a competitive opponent, actually behave in a negotiation?
Whether there is a disconnection between their forecasts for their behavior and their actual behavior.
How do these expectations impact the amount for which negotiators are willing to settle?

3. 4 STUDIES SETUP
In the studies, the negotiators are each randomly assigned an opponent with whom to negotiate.
The negotiators are each given information regarding the level of competitiveness of his or her opponent prior to the negotiation.
The levels of competitiveness describing each opponent are randomly assigned to the opponent.

4. STUDY 1: BEHAVIORAL FORECASTS
Study 1 focused on behavioral forecasts on individuals’ predictions of how they would behave when possessing a competitive expectation of an opponent.

5. STUDY 1: BEHAVIORAL FORECASTS
Results
Study 1 found that negotiators who expected a very competitive opponent predicted they would become more competitive than those who expected a less competitive opponent.

6. STUDY 2: THE IMPACT OF COMPETITIVE EXPECTATIONS
Study 2 examined the impact of competitive expectations of an opponent on the setting of one’s own reservation price and the making of counteroffers during a negotiation.

7. STUDY 2: THE IMPACT OF COMPETITIVE EXPECTATIONS Results
Negotiators who expected a very competitive opponent became less competitive than those who expected a less competitive opponent by setting lower, less aggressive reservation prices; by making lower, less aggressive counteroffers (i.e., making greater concessions); and by being more likely to accept a final offer that slightly exceeded their BATNA.

8. STUDY 3: EXPECTATIONS VS. OUTCOMES
Study 3 investigated whether expectations of an opponent’s competitiveness influenced actual negotiated outcomes.

9. STUDY 3: FORECASTS VS. OUTCOMES Results
In examining negotiators’ actual behaviors and outcomes in a face-to-face negotiation, negotiators who expected a more competitive opponent set lower, less aggressive reservation prices and agreed to lower, less favorable negotiated outcomes.

10. STUDY 4: FORECASTS VS. ACTUAL BEHAVIOR
Study 4 directly tested the disconnection suggested in the previous three studies by examining forecasts for future behavior and actual behavior within the same sample.

11. STUDY 4: FORECASTS VS. ACTUAL BEHAVIOR Results
Again, negotiators predicted that they would become more competitive when facing a very competitive opponent, but they actually became less competitive.
Results further show that negotiators facing a very competitive opponent were significantly more relieved to reach an agreement than those facing a less competitive opponent.
After the negotiation, those possessing competitive expectations came to see the opponent as being rather competitive.

12. CONCLUSION Behavioral Forecasting
There is a disconnection between how individuals think they will respond when negotiating with a very competitive opponent and how they actually respond. Negotiators think they will be more competitive, but they actual become less competitive.

13. CONCLUSION Behavioral Forecasting
Why are people inaccurate? Why do they think that they will fight fire with fire in negotiation?

14. CONCLUSION Self-Fulfilling Nature of Expectations
Expectations of an opponent’s competitiveness consistently influenced the focal negotiator’s reservation price and predicted outcome, which resulted in a lower, less favorable outcome. Negotiators who expected their opponent to be very competitive became less competitive by reducing their reservation prices and counteroffers, allowing their opponents to appear to be competitive and to get superior outcomes. After the negotiation, negotiators saw their opponents as being rather competitive; their expectations of competitiveness was confirmed.

15. CONCLUSION Self-Fulfilling Nature of Expectations
By reducing their demands in the face of a seemingly competitive opponent, negotiations burdened with competitive expectations ended up creating a reality that they possibly wished they had not created. They had gone from a self-fulfilling prophecy to a self-defeating one: Their erroneous expectations of their opponent led to genuinely inferior outcomes and enabled their opponent to claim more value.