Bargaining Stances and Outcomes in Buyer–Seller Negotiations: Experimental Results

Abstract

SUMMARY Buyer–supplier relationships are affected by contractual negotiations between the respective parties. This paper examines the variables likely to influence the outcomes of a two‐party negotiation in an experiment that reproduces some of the details encountered in real‐life negotiations. The study used two‐party negotiations to examine the effect of reservation prices, aspiration prices and competitive stance on the outcome of the negotiations. The study confirms the importance of reference points, and that negotiators may adjust their reference points during the negotiation. The results also suggest that the negotiator's bargaining stance has a significant influence on settlement price and may act as a moderator of the effect of reference points on settlement price. Finally, the analysis suggests that a negative bargaining zone does not necessarily lead to an impasse; however, it increases the risk of an impasse compared with a negotiation with a positive bargaining zone.