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Procedural Justice in Negotiation: Procedural Fairness, Outcome Acceptance, and IntegrativePotentialAuthor(s): Rebecca Hollander-Blumoff and Tom R. TylerSource: Law & Social Inquiry, Vol. 33, No. 2 (Spring, 2008), pp. 473-500Published by: Wiley on behalf of the American Bar FoundationStable URL: http://www.jstor.org/stable/20108768 .
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Law & Social Inquiry Volume 33, Issue 2, 473-500, Spring 2008
Procedural Justice in Negotiation: Procedural Fairness, Outcome
Acceptance, and Integrative Potential
Rebecca Hollander-Blumoff and Tom R. Tyler
Two correlational studies test the hypothesis that procedural justice, or fairness of process, plays a role in acceptance of agreements reached
through bilateral negotiation. Both studies test the relationship between the
fairness of the process used to resolve a dispute, objective monetary out
comes, subjective assessments of outcome favorability, and subjective assessments of outcome fairness. Additionally, the second study tests the
hypothesis that negotiations characterized by greater procedural justice result in more potential for integrative bargaining. The results suggest that
procedural justice encourages the acceptance of negotiated agreements, as well as leading to the opportunity for increased integrative bargaining.
INTRODUCTION
The negotiation literature has long considered why people fail to reach
mutually beneficial, or economically efficient, agreements (Fisher, Ury, and
Patton 1981; Mnookin and Ross 1995). This failure has important implica tions for an overburdened legal system: when individuals fail to reach agree
ment, they often take their disputes into the legal arena. Many cases within
the legal system do settle, but both short- and long-term failure to reach
Rebecca Hollander^Blumoff is an Associate Professor at Washington University School
of Law. Address correspondence to [email protected].
Tom R. Tyler is a University Professor at New York University in the Department of
Psychology and School of Law.
The authors acknowledge with gratitude the support of Peggy Cooper Davis, the Lawyering
Program at New York University, Oscar Chase, Samuel Estreicher, the Institute of Judicial Administration at New York University, and Washington University School of Law.
? 2008 American Bar Foundation. 473
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474 LAW & SOCIAL INQUIRY
mutually beneficial agreements tax the system with ongoing case manage
ment, and some potentially resolvable disputes result in trials that consume
valuable resources.
The behavior of lawyers may play a role in breakdowns in conflict
negotiation. The "lawyer as shark" metaphor, although a caricature (Galanter
2002), reflects a widely held view that lawyers must be aggressive and tough in order to best protect their clients' interests. Lawyers are trained and steeped in the adversary system. This system, with its duty of zealous representation,
encourages attorneys to exalt their client's interests while ignoring or
denigrating those of their opponent. Indeed, the popular saying "nice guys finish last" reflects a general perception, not limited to the legal context,
that treating others in a fair manner may be a display of weakness that will
lead to personal loss. In the context of being a lawyer, such weakness may be deemed unprofessional or even potential malpractice. But if acting
fairly does not hurt, and perhaps even helps, one's ability to represent his
or her clients, then lawyers need not fear that fair treatment of an adversary is irresponsible. This article presents the results of two studies that suggest that legal conflicts might be more successfully resolved if lawyers paid
greater attention to issues of fairness of process, or procedural justice, in legal
negotiation.
INSTRUMENTAL MOTIVATIONS AND COGNITIVE BIASES IN NEGOTIATION
In conflict negotiation, two or more people with divergent preferences seek agreement about how to resolve their dispute. In a world of rational
actors and perfect information, negotiation outcomes would hinge only on
the existence of an overlapping bargaining range between the parties. In
the legal realm, the potential transaction costs of litigation would provide additional incentive for nearly all suits to settle (Priest and Klein 1984).
However, even though a majority of lawsuits do settle, a significant portion still result in costly litigation, and a much greater number settle only after
incurring substantial transaction costs. Just as sanctions that theoretically
ought to be sufficient to deter violations of the law do not always deter such
violations, economic incentives that provide a theoretically ample basis to
produce settlement do not always yield such agreement in reality. Individuals' motivations play a critical role in understanding why legal
negotiations often fail to yield settlements, or settlements earlier in the life
of a legal dispute. Individuals have strong instrumental motivations?they want to achieve goals that match their preferences regarding the resolution
of the dispute. Typically, these are goals that will maximize their own alloca
tion of resources. Negotiation literature has suggested that negotiation failures
happen, in part, because the desire to maximize gains and minimize losses
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 475
leads individuals to act in ways that prevent mutually beneficial agreements from occurring.
In particular, one influential approach to the study of negotiation, stem
ming from important research developments in psychology, has focused on
the cognitive biases that may act to impede agreement. Many of these cog nitive biases relate directly to an individual's predilection for gain maximi
zation and loss minimization. For instance, a fixed pie bias (Bazerman and
Neale 1983) may make an individual assume that anything that benefits the
other party will hurt him or her; reactive devaluation (Ross 1995) may lead
an individual to discount a proposal merely because of the identity of the
proposer; framing effects may tap into an individual's greater sensitivity to losses (Kahneman and Tversky 1984); and the endowment effect finds
that people are more averse to giving things up than they are eager to acquire them (Kahneman, Knetsch, and Thaler 1990). Thus, the instrumentally and
economically motivated actor who wants very much to maximize gain and minimize loss may be hampered in his or her evaluation of expected
utility during negotiation by psychological processes for managing informa
tion. This "bounded rationality" (Simon 1955; Jolis, Sunstein, and Thaler
1998) has been explored in the broader behavioral literature in economics
through experimental games that often simulate negotiation (Blount 1995; Bolton and Ockenfels 2000; Charness and Rubin 2002; Fehr and Schmidt
1999; Hibbing and Alford 2004). Cognitive biases related to instrumental motivation can be blamed for
failures in both distributive and integrative negotiation settings. Distributive
bargaining typically takes the form of arguing over the distribution of a fixed
set of resources; it rests on the classic "I win/you lose" dichotomy, meaning that for every dollar or resource that one party gets at the bargaining table, the other party loses that dollar or resource. Integrative bargaining, in con
trast, involves the expansion of the set of resources that forms the basis of
a conflict. Distribution remains important, but the initial resource expansion makes it more likely that each party will receive a distribution that will satisfy
its needs.
In the distributive context?a negotiation over how to allocate fixed
resources?parties may fail to reach an agreement even though they have
overlapping bargaining zones because they are motivated to take actions
designed to protect their self-interest. For example, they may strategically
misrepresent their bottom lines, such that the parties never even realize that
there is a zone of possible agreement (Walton and McKersie 1965; Lax and
Sebenius 1986; Mnookin, Peppet, and Tulumello 2000). Instrumental moti
vations may also lead to failure to realize the potential of integrative bar
gaining. There are at least two ways in which the set of resources over which
negotiation occurs (the "pie") may be expanded: first, there may be ways to
creatively generate new options that suit both parties' preferences better
than the original set of options; second, there may be nonidentical but
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476 LAW & SOCIAL INQUIRY
complementary preferences that can be exploited to meet both parties' needs.
In option generation, for instance, a couple arguing over which of two
new cars to buy may find that there is a third car that satisfies both of their
preferences. In a classic example of gain from differential preferences, two
children fighting over an orange benefit from exchanging information, so
that instead of cutting the orange in half, one may take the peel for baking and the other may take the fruit to eat (Fisher, Ury, and Patton 1981).
As these examples show, disclosure of information and preferences facilitates integrative bargaining and value creation. Hence, in the integrative
context, parties may fail to create joint solutions because they fail to disclose
important information that could provide an opportunity for value creation.
Parties strongly motivated by self-interest may not disclose information
because they fear that disclosure could disadvantage them in terms of
outcomes (Fisher, Ury, and Patton 1981; Lax and Sebenius 1986; Mnookin,
Peppet, and Tulumello 2000).
ALTERNATE MOTIVATIONS IN NEGOTIATION
Other research on the psychology of negotiation, however, has suggested that an exclusive or central focus on individuals' motivations to maximize
gain and minimize loss may miss an important part of the picture. This body of research conceptualizes individuals not as would-be rational actors led
astray by their own cognitive mistakes but rather as complex actors motivated
by social concerns (Pruitt and Carnevale 1993) and influenced by affective
processes and cultural norms (Kumar 2004)- For example, research has shown
that individuals in negotiation demonstrate epistemic motivation (De Dreu,
Koole, and Oldersma 1999; Galinsky and Mussweiler 2001), power and
impression motivations (De Dreu and Carnevale 2003), and social motivation
(Van Lange 1999; Pruitt and Carnevale 1993). To the extent that individuals
are shaped and driven by noneconomic factors, these forces may provide alternative ways to enhance the efficacy of negotiations and negotiated
agreements.
Fairness motivations have also been considered: in particular, a plethora of research about the "ultimatum game" has shown that individuals are deeply concerned with issues of distributive fairness (Guth, Schmittberger, and
Schwarze 1982; Thaler 1992; Bazerman and Neale 1995). Participants
routinely reject outcomes that are objectively "better" for them than walking
away. Research on distributive justice suggests that people consider, and care
deeply about, the fairness of their outcomes and are especially concerned
with relative outcomes. However, fairness research relating to negotiated conflict has focused predominantly on outcome fairness, or distributive justice
(Welsh 2004), with only limited attention given to the role of fairness of
process, or procedural justice, in negotiation.
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 477
THE ROLE OF PROCEDURAL JUSTICE IN CONFLICT
Research on procedural justice in psychology has produced a robust set
of findings suggesting that individuals are motivated by concerns about the
fairness of the process by which decisions are made, and that people place a high value on the fairness of the process by which decisions are made and
on the fairness of the treatment they receive from others. Procedural justice research has shown that people care not just about maximizing their out
comes, or even about the distributive justice of their outcomes, but also care,
independently, about the fairness of the process by which those outcomes
were obtained. Three distinct theories have developed for why procedural
justice matters to individuals. First, theorists have argued that individuals
view a fair process as a way to achieve fair outcomes (Thibaut and Walker
1978); second, theorists have suggested that individuals care about their status
in society, and the level of procedural justice afforded to them offers
important cues about this status (Tyler and Lind 1992); third, procedural
justice judgments may be important because they convey important infor
mation relevant to uncertainty reduction (Lind 2002; Van den Bos and
Lind 2002). Unsurprisingly, the genesis of procedural justice research was in the legal
arena (Thibaut and Walker 1978). And in the legal arena, a rich literature
has developed showing that procedural justice plays a role in how people assess decisions produced by a judge (Tyler 1990), by a jury (MacCoun and
Tyler 1988), by a police officer (Tyler and Folger 1980), and by a mediator
(Pruitt et al. 1993). When people interact with the legal system in some
way, or when they bring a dispute to the legal system for resolution, they care deeply about the fairness of the process that is used to resolve their
encounter or dispute, separate and apart from their interest in achieving a
favorable outcome. Individuals feel more satisfied with, and are more likely to adhere to, dispositions that are reached through procedures that those
individuals feel are fair. But procedural justice effects have also been found
beyond the legal system. Procedural justice has been found to play a large role in assessments of decision making in a wide variety of contexts, including
managerial and political settings, and effects have been found both when
individuals are involved in specific situations of conflict resolution as well
as when a more general decision-making system is implicated (Tyler and
Blader 2000, 2005; Tyler and Huo 2002; Tyler and Lind 1992). Most of the prior studies of the effects of procedural justice have focused
on third-party dispute resolution. Third-party decision makers (MacCoun and
Tyler 1988; Tyler and Lind 1992) or facilitators (Pruitt et al. 1993) can gain
parties' increased acceptance of decisions through the manner in which they exercise authority. While some research has explored the question of whether
procedural justice effects may be present even in the absence of a third
party authority in certain contexts such as a market system (Sondak and
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LAW & SOCIAL INQUIRY
Tyler 2004), there has been very little research on the effects of procedural
justice in a bilateral conflict negotiation setting. In one relevant study, Molm, Takahashi, and Peterson (2003) compare
negotiation to reciprocal exchange and find that negotiation may enhance
the view that other parties are procedurally unfair, lowering willingness to
accept agreements reached. The study does not seek to explore what impact
differing levels of procedural fairness in an isolated negotiation setting would
have on willingness to accept an agreement; rather, the study is comparative,
looking at the differing perceptions of procedural justice in a negotiated versus
a reciprocal setting. Also in the negotiation setting, Brockner et al. (2000) examined the impact of cultural and self-construal differences on the effects
of the interaction between procedural justice and outcome favorability on
the desire for future business dealings with an individual following a negotia tion. But these prior studies do not address our central concern here: does
the fairness of a negotiation process play a role in how the negotiation
participants evaluate an agreement, and how likely the negotiation participants are to accept the agreement?
On the one hand, prior literature demonstrating individuals' concern
for procedural justice in a variety of legal settings would suggest that when
individuals are in a conflict resolution setting, they are likely to care about
procedural justice, even when a third-party legal decision maker is not
present. And, because the vast majority of legal conflicts are settled through
negotiation rather than by a third-party decision maker, this question bears
upon the importance of procedural justice in the day-to-day operation of
the legal system, writ broad. On the other hand, the rational actor paradigm
suggests that individuals in a conflict negotiation setting should be focused
on maximizing outcome, disregarding the process by which that outcome is
achieved.
Our goal is to first test the hypothesis that procedural justice plays a
role in shaping the acceptability of negotiated dispute resolution outcomes.
Two correlational studies test the argument that the willingness to accept bilateral negotiated agreements is shaped by the fairness of the negotiation
process separately from the objective or subjective quality of those agree ments. The studies do not suggest that outcomes are unimportant but rather
that procedural justice judgments make a distinct contribution to people's reactions to negotiations and negotiated outcomes.
Our second goal is to explore the difference in procedural justice effects
in bargaining that is largely distributive versus bargaining that has a greater
potential for being integrative. Because procedural justice is characterized
by increased levels of trust and participation, we hypothesize that settings
high in procedural justice may lead to increased disclosure of information, the necessary predicate to integrative agreement, and that such information
disclosure is in fact likely to create agreements that are more integrative.
Study 1 tests the effects of procedural justice on outcome acceptance in a
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 479
situation in which there is little opportunity for reaching an integrative agree
ment, although both parties gain from reaching an agreement within the
zone of possible agreement. Thus, Study 1 primarily explores the role of
procedural justice in shaping the willingness to accept decisions. Study 2 uses
a similar negotiation, but one that involves greater opportunity for the parties to make an integrative agreement. In Study 2, we seek to explore the effects
of procedural justice on both outcome acceptance and integrativeness of the
negotiation process and outcome.
Both of the studies reported are correlational studies in which negoti ators are interviewed after the completion of the negotiation. They are asked
at that point about factors related to the procedural justice of the negotiation, as well as about their willingness to accept the decisions reached. Since these
judgments were simultaneously assessed at only one point in time, our data
do not permit the conclusion that procedural justice judgments are causally antecedent to willingness to accept. It could be that people decide to accept
the outcome and then later rationalize that decision by viewing the nego tiation as being fair. This possibility cannot be ruled out by this cross-sectional
study. Similarly, while the dependent variables in Study 2 are objectively measured outcomes, it is similarly possible that people's procedural justice
judgments are a reaction to their knowledge of their objective outcomes.
Although a large experimental literature in psychology shows a causal link
between procedural justice and subsequent willingness to accept decisions
(Lind and Tyler 1988; Tyler 2000; Tyler and Lind 1992), these studies are
purely correlational, and thus their results cannot establish the causal link
between procedural justice and subsequent willingness to accept decisions
in the negotiation setting. We nonetheless believe this is an important first
step in exploring the connection between procedural fairness and willingness to accept outcome in a negotiation setting.
Additionally, we note that the setting?involving law students engaged in a simulated legal negotiation, with a live but fictional client?differs from
a real-life setting involving lawyers, whether seasoned or inexperienced, with
real clients involved in real disputes. Although extrapolation of our results
to a real-world setting is thus less certain, we note that the participants,
first-year law students, were highly engaged and motivated by this task, and
that the role that the law students played, representing a client, is the role
for which they are being trained in law school. Furthermore, the students
did have some real stake in the negotiation because a professor was evaluating their performance and thus their ability to function effectively as a lawyer
working on behalf of a client. Although a more realistic or naturalistic setting would have advantages of external validity, this controlled setting does have
the benefit that all students negotiated the same substantive dispute. This
limited the number of confounding variables that would stem, in a field study, from the variety of individual client personalities and the potentially wide
range of substantive matters being negotiated.
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480 LAW & SOCIAL INQUIRY
STUDY 1
Method
The participants in this study were first-year law students. The students
were enrolled in a required law school class within which they participated in a negotiation exercise that included a simulation of a negotiation between
two attorneys. In this exercise, each student was randomly assigned a role
as a lawyer for either a homeowner or a contractor in a dispute over a building contract. Both this study and Study 2 were conducted in accordance with
American Psychological Association (APA) ethical principles.
Participants
All of the students in the class participated in the exercise, but only those in which both members of the negotiation dyad gave their consent
to use their data were included in the study. This led to 266 included indi
vidual participants, who comprised 133 dyads.
Procedure
Each side of the case was described in a set of material provided to
students representing that side. Each participant also met with a confederate
trained to act as the "client," who presented a story of his or her side of
the case based upon a standardized set of material provided to the client
beforehand. The participants read common background material and engaged in one interview with the client in which they heard more details of the
client's story from their client directly. Clients also indicated the range of
acceptable negotiated outcomes. All factual information was based upon a
common set of material, but clients gave individualized presentations of their
case to their lawyers.
The participants then engaged in a bilateral negotiation with the other
party, a setting designed to mirror real-world pretrial negotiations. Partici
pants were told to do their best to represent their client by seeking to obtain
a desirable outcome for their client. As in real-world negotiations, the parties were not obligated to come to an agreement and could reject any agreement and indicate a preference for moving the case into arbitration, which was
provided as the dispute resolution mechanism in the underlying contract
between the parties. Participants were given a common estimate of arbitration
costs and were required to perform independent legal research in order to
assess the likelihood of potential outcomes of arbitration in light of relevant
case law. Participants were given no outside incentive for their financial or
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 481
other achievements during the negotiation, but negotiation performance was
analyzed and discussed by both classmates and a professor, providing inde
pendent motivation to negotiate seriously and well.
Independent Variables
Side. This represents the party whom the participant was selected to
represent.
Objective Outcome. Each outcome was coded based on the value of at
least nine different survey items that formed the subject of the negotiation. The outcome received a net value score that was based on the difference
between the total amount paid by the homeowner to the contractor and
the cost or value of the work performed by the contractor. Outcomes were
given a z score to reflect their monetary outcome relative to the other out
comes achieved by individuals representing the same client.
Subjective Outcome Favorability (alpha =
0.85). The items were: "My out
come was favorable to my side"; "The outcome exceeded my expectations"; and "My client will be satisfied with this outcome."
Subjective Outcome Fairness (alpha =
0.67). The items were: "The out
come was fair to my client"; "The outcome was fair to the other party"; "The
outcome was equally fair to both parties"; and "How fair was the outcome
of the negotiation?" Procedural Justice (alpha
= 0.89). The items were: "My negotiation
partner gave me the chance to express my views"; "My negotiation partner
listened when I expressed my views"; "My negotiation partner respected my client's rights"; "My negotiation partner treated me with courtesy"; "How
fairly were you treated during the negotiation"; "With respect to fairness, how did your partner treat you?"; "With respect to fairness, how did you treat your partner"; "With respect to fairness, how would you rate the conduct
of your negotiation?"; and "How trustworthy was the other attorney?"
Dependent Variables
Willingness to Accept the Outcome (alpha =
0.79). The items were: "If
I were my client, I would accept this agreement"; "I think this agreement forms the basis for a good long-term solution"; "I will recommend to my client that they reject this agreement and go to arbitration" (reverse-coded); and "If we went to arbitration, my client would likely get a better outcome"
(reverse-coded).
Feelings During the Negotiation (alpha =
0.89). The items were: "Things that happened in the negotiation made me angry" (reverse-coded); "Things that happened in the negotiation upset me" (reverse-coded); "Things that
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482 LAW & SOCIAL INQUIRY
happened in the negotiation made me happy"; and "How much did you enjoy the negotiations?"
Negotiation Was Collaborative (alpha =
0.84)- The items were: "My part ner cared about my satisfaction"; "I cared about my partner's satisfaction";
"The outcome took my client's needs into account"; "The outcome took the
other parties' needs into account"; "I was collaborative during the negotia
tion"; "My negotiation partner was collaborative during the negotiation"; "The process avoided conflict"; "I tried to come up with a solution that would
make us both content"; "My partner tried to come up with a solution that
would make us both content"; "I tried to be creative in crafting an agreement";
"My negotiation partner tried to be creative in crafting an agreement"; "I
was concerned about the clients being on good terms after the negotiations"; and "I sought to identify common interests."
Of the three dependent variables, the one closest in content to pro
cedural justice was the measure of the degree to which the negotiation was
collaborative. Structural equation modeling was used to examine whether
this variable was distinct from procedural justice (Arbuckle and Wothke
1999). The items for the procedural justice and collaborative negotiation scales were first allowed to load on a single factor, and an overall index of
fit was derived. They were then forced to load upon the two distinct factors,
and another index of fit was estimated. A comparison of these two indices
indicated that the model assuming that procedural justice and collabora
tiveness were distinct factors fit the data significantly better (differences in
the Chi-squares (1 d.f.) =
211.80, p < .001).
Results
The first issue examined was whether the fairness of the negotiation
process was linked to the nature of a person's numerical outcome. Three
types of regression equation addressed this question. First, the study examined
whether the degree to which each of the 266 individual negotiators characterized his or her negotiation as procedurally just was linked to
objective and subjective outcome. Second, the study examined the same
question of whether the degree of procedural justice a person experienced in the negotiation was linked to objective and subjective outcome, but from
the perspective of each of the 133 dyads. In this second analysis, the rating of each party was considered controlling for the rating of the other party in the dyad. The question addressed, therefore, was whether experiencing
more or less procedural justice than the other party was linked to receiving a better or worse outcome than the other party. Third, dyads were treated
as sums. So, for example, the total procedural justice in the dyad was
related to the total outcomes obtained. All of these analyses are shown in
Table 1.
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 483
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484 LAW & SOCIAL INQUIRY
TABLE 2.
Factors Shaping Reactions to Negotiated Outcomes: Study 1
Individual Judgments (n = 266)
Willing to Negotiation was
Accept Decision Feelings Collaborative
Beta Weights Objective Outcome -.03 0.04 0.03
Subjective Outcome Favorability 0.30*** 0.37*** 0.13
Subjective Outcome Fairness 0.26*** 0.15* 0.21***
Subjective Procedural Justice 0.28*** 0.27*** 0.48***
Side 0.11* -.01 0.06 ***
Adj. RVsq. 45o/o*** 40%*** 46%:
The results shown in Table 1 indicate that the degree to which people
reported that they experienced a procedurally just negotiation was not linked
to their objective outcome. This was true irrespective of whether people were
considered alone or in relationship to their dyadic partners. In neither
case did the correlation of procedural justice on objective outcome suggest
significance. In contrast, subjective assessments of outcome did correlate
significantly with assessments of the degree of procedural justice present in the negotiation in both the individual (r
= .44, p < .001) and the dyadic
(r =
.39, p < .001 for relative judgments; r = 0.45, p < .001 for summary
judgments) analyses. The second question addressed is whether or not procedural justice
shaped the willingness to accept the agreement. Regression analyses, shown
in Table 2, indicated that people were more willing to accept the agree ment and were less interested in moving forward to arbitration if they rated their negotiation as procedurally fair in the individual level analysis
(beta for procedural justice =
0.28, p < .001). This result was similar for
dyadic analysis of relative judgments, shown in Table 3 (beta for procedural
justice =
0.26, p < .01), and for the summary judgment (beta =
0.26,
p < .01), shown in Table 4.
If we extend the dependent variables considered to include how people felt during the negotiation and whether they felt that the negotiation was
collaborative, even stronger procedural justice influences were found. Those
who felt that the negotiation was procedurally just indicated that they felt
better during the negotiation and that it was more collaborative in nature.
The way that people felt during the negotiation and the degree to which
they viewed the negotiation as collaborative were important because they
encouraged people in this negotiation to reach better outcomes. One clear
way to do that in this case was to reach an agreement. If we consider the
joint outcomes obtained by the parties, ignoring who gains more or less, we
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 485
TABLE 3.
Factors Shaping Reactions to Negotiated Outcomes: Study 1
Relative Dyadic Judgments (n = 133)
Willing to Negotiation was
Accept Decision Feelings Collaborative
Beta Weights
Relative Objective Outcomes 0.12 0.04 -.02
Rel. Subjective Outcome Favorability 0.29** 0.36*** 0.09
Rel. Subjective Outcome Fairness 0.22* 0.07 0.26**
Rel. Subjective Procedural Justice 0.26** 0.41*** 0.48***
Adj. R.-sq. 35%*** 47o/0*** 49o/o***
TABLE 4. Factors Shaping Reactions to Negotiated Outcomes: Study 1
Summary Dyadic Judgments (n = 133)
Sum of Willingness to Sum of Sum of
Accept the Decision Good Feeling Collaborativeness
Beta Weights Sum of Objective Outcomes 0.08 -.08 0.12
Sum of Subjective 0.29*** 0.35*** 0.07
Outcome Favorability
Sum of Subjective 0.22* 0.07 0.26***
Outcome Fairness
Sum of Subjective 0.26** 0.40*** 0.49***
Procedural Justice
Adj. R.-sq. 35%*** 47o/o*** 50%***
find that dyads that jointly indicated that they were collaborative reached
jointly better outcomes (r =
0.23, p < .01), as did dyads that jointly indicated
that there was good feeling during the negotiation process (r =
0.22, p < .01).
Only 5 percent of the dyads failed to reach an agreement, but those
dyads were characterized by lower joint outcomes, because the mean outcome
when no agreement was reached was zero. As one would anticipate, whether
or not an agreement was reached was linked to both parties feeling that
the procedures used were fair (r =
0.16, p < .10), both parties indicating
having good feelings during the negotiation (r =
0.29, p < .001), and both
parties saying that collaboration occurred (r =
0.16, p < .10). The analysis indicates that procedural justice had an influence beyond
that of outcomes, but it does not directly compare the magnitude of that
influence, so it does not show that procedures are more important than
outcomes. However, the influence of procedures is distinctly important,
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486 LAW & SOCIAL INQUIRY
and significantly so. And, as noted, it is important to keep in mind that
correlational data shows association, not causality.
What led to a high joint level of good feeling and collaborativeness
within a dyad? To examine the antecedents of these variables, summary indi
ces were constructed of joint levels of each independent variable within the
dyadic data. These were used in regression analysis to explore the antecedents
of joint good feelings and joint collaborativeness. The results are shown in
Table 4. They indicate that those dyads in which there were higher joint levels of procedural justice also had higher joint levels of good feeling and
of collaborativeness. Hence, procedural justice was important because it was
linked to joint good feeling, joint collaborative efforts, and overall high out
comes for the dyad (primarily linked to a higher likelihood that such dyads
actually reached agreements rather than to the nature of the agreements
reached).
STUDY 2
The goal of Study 2 was to test the argument that procedural justice will lead to better agreements because it will encourage integrative solutions.
Three issues were considered: (1) does procedural justice lead to the infor
mation disclosure that is a predicate of integrative solutions; (2) do dyads who engage in procedurally just negotiations reach agreements that are more
integrative, in the sense that they have higher joint value for the parties; and (3) are outcomes in procedurally just negotiations more equal in value.
As discussed above, one important limit to Study 1 was that the negotiation task allowed only limited possibilities for exploring value creating opportu nities. (The task was largely zero-sum, as indicated by the correlation between
the numerical outcome of each individual in the dyad, r = -.96, p < .001.)
Study 2 used an expanded version of the same problem in which there was
greater opportunity to engage in value creation via the disclosure of infor
mation in order to better address the question of whether procedural justice facilitated integrative bargaining.
In Study 2, the negotiation task was redesigned to include a piece of
information that had the potential to provide an opportunity for value
creation. The new task added an additional item that could be the subject of negotiation; the item was of no cost to one party to give up but of significant value to the other party to acquire. Neither party was aware of the degree of value to the other party. In order for value creation to be possible, the
party who valued the item had to reveal that fact. Also, this task allowed
the parties to create joint value, and the amount of joint value created was
measured. A more detailed description of the negotiation task, and more
detail about the integrative element that was added to the problem, is
contained in the Overview of Problem and Explanation of Integrative
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 487
Measures (at end of article), which also includes greater theoretical
explanation of the dependent variables on integration.
Method
Study 2 uses the same basic approach outlined in Study 1.
Participants
A total of 414 first-year law students participated in this study as part of a negotiation exercise in a required law school class. The procedures used were identical to those in Study 1. As before, all of the students in the class
participated in the exercise, but only those in which both members of the
negotiation dyad gave their consent to use their data were included in the study. This led to 296 included individual participants, who comprised 148 dyads.
Procedure
The procedure for Study 2 was identical to that for Study 1. The only material difference in the procedure was the addition of the integrative element noted above.
Independent Variables
Subjective Outcome Favorability. A three-item scale was used (alpha =
0.88). The items were: "My outcome was favorable to my side"; "The outcome exceeded
my expectations"; and "My client will be satisfied with the outcome."
Subjective Outcome Fairness. A four-item scale was used (alpha =
0.72). The four items were: "The outcome was fair to my client"; "The outcome
was fair to the other party"; "The outcome was equally fair to both parties"; and "How fair was the outcome of the negotiation."
Procedural Justice. A two-item scale was used (alpha =
0.72). The items
were: "How would your rate the overall fairness of the negotiation process"; and "How fairly were you treated during the negotiation?"
Dependent Variables
Study 2 focuses upon objective measures of the outcomes of negotiation, coded from detailed participant reports about the final agreements reached.
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488 LAW & SOCIAL INQUIRY
Objective Rating of Disclosure. In constructing the problem for the second
negotiation, the task was altered to include information that, if revealed by one party (the contractor), could serve as the basis for joint value creation.
The variable was dichotomized, with each dyad rated as either having had
this information disclosed (both parties had to indicate in their questionnaire that the material was disclosed) or not disclosed. In forty-eight (32.4 percent) of the dyads, there was agreement that the information was disclosed. While
disclosure of the information did not mandate that an integrative solution
was reached, the unwillingness to disclose confidential information would
be an impediment to the ability to develop integrative agreements.
Objective Measure of joint Value Creation. Another approach to joint value creation is to focus directly upon the amount of value created by sum
ming the gains to both parties to the negotiation, without any reference to
who in the dyad made the gain. In the dyads studied, the joint outcomes
ranged from joint losses of-9,800 to joint gains of 9,000 (mean =
$4,760.47,
standard deviation = $1,811.04).
Objective Measure of the Equality of the Division of Gains. Dividing gains
equally is not a necessary goal of integrative bargaining. However, proce
durally fair negotiations, which foster a collaborative motivation, might lead
to an equal division of resources. To test this argument the relative gains of the two parties were established. The relative outcome variable ranges from
-$19,400 to $19,800 (mean =
$1,139.92; standard deviation = $5,811.45).
This variable was transformed to create an index of the absolute amount of
difference between the parties (0 to $19,800; mean = $4,449.69, standard
deviation = $3,900.94).
Results
As with Study 1, regression analysis was used on the dyadic level to
examine the influence of the negotiation dynamics on negotiation outcomes.
The summary dyadic analysis is presented in Table 5 (which mirrors Table 4).
In the case of information disclosure, a dichotomous variable, logistic regres
sion was performed. With the scaled variables of total joint outcome and
absolute difference between the parties, regression analysis was used.
Procedural justice played a significant role in whether the value
creation opportunity was disclosed. The joint procedural justice of the dyad influenced whether the disclosure occurred (unstandardized logistical regres
sion coefficient = 0.94, p < .01). Similarly, the joint procedural justice of
the dyad shaped the total outcome of the parties, with just negotiations
leading to higher levels of joint outcome (beta =
0.15, p < .05). Finally,
procedurally just negotiations led to outcomes in which resources were
more equally divided (beta =
0.20, p < .01). Hence, while controlling for
both subjective outcome favorability and outcome fairness, procedural
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 489
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490 LAW & SOCIAL INQUIRY
justice influenced all three objective measures of integrative negotiation outcomes.
DISCUSSION
The results of Study 1 demonstrated that in a largely zero-sum negotia
tion, individuals who experienced their negotiations as procedurally just, both
in absolute terms and relative to their peers, did not end up with better or worse
objective numerical outcomes. Simply put, there was no relationship between
the experienced fairness of the negotiation process and the numerical outcome.
In Study 1, this relationship was tested in three distinct ways: first, by looking
solely at individual judgments of fairness and individual outcomes; second, by
examining each dyad and exploring relative judgments of fairness and their
relationship to individual outcomes; and third, by looking at the summary
dyadic assessment of fairness and its relationship to individual outcomes. In
each case, the procedural justice of the negotiation process had no relation
ship with the objective numerical outcomes obtained by the participants. These results indicate, first, that in a fixed-pie negotiation, neither an
individual perception that one was treated fairly, nor a perception that one
acted fairly toward the other person, has any bearing on one's numerical
outcome. Second, whether an individual is a "nice guy" relative to the other
party to the negotiation?that is, treats the other party more fairly than the
other party treats him or her?also bears no relationship to the numerical
outcome. The data suggest that with respect to the numerical outcome that
they achieve through negotiation, people neither benefit from nor are hurt
by acting fairly toward the other party and/or experiencing procedural fairness from the other party. Treating another party fairly, then, neither
guarantees one an advantageous financial outcome nor condemns one to a
disadvantageous financial outcome.
However, in Study 2, fairness of process did have a relationship to negotia tion outcome: high levels of procedural justice led to higher joint outcomes
and also led to outcomes in which the results were more equally divided
between the parties. Higher levels of procedural justice were also linked to
a higher likelihood that information was disclosed that could lead to the
opportunity for value creation; these results suggests that procedural justice facilitates an expansion of the negotiation pie by encouraging the requisite information disclosure. These results suggest that using fair procedures is one
way to move beyond the fixed-pie bias and facilitate the development of
integrative bargaining. Similarly, using fair procedures helps to prevent one
of the parties in bilateral negotiation from hogging the whole surplus that
integrative bargaining creates.
The relationship between procedural fairness and outcome in the zero
sum setting of Study 1 is a particularly important finding because it is not
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 491
subject to the methodological concerns about internal validity that are
relevant to other aspects of these studies. The relationship between procedural
justice and objective outcome in Study 1 does not involve any causal infer
ence; the lack of a connection between actual outcomes and assessments of
the justice of the negotiation procedure is striking. In Study 2, there is less
clarity; there is support for our hypothesis that procedural justice acts as a
causal factor to promote and facilitate integrative agreements in which the
surplus is shared equally, but it is possible, as well, that agreements in which
parties bargain integratively and split the surplus equally are then evaluated
as procedurally fair.
Beyond the lack of relationship between procedural justice and outcome
in Study l's zero-sum setting, and the relationship between procedural justice and integrative outcome in Study 2, there is evidence that procedural justice has additional consequences in negotiation. Since people viewed an agree ment negotiated through fair process as more fair, we would anticipate that
they would be more willing to accept it. The results of both studies support this argument. They are consistent with the suggestion that people were more
willing to accept a decision that was reached via a procedure in which they felt treated fairly. This procedural justice effect emerges both from the indi
vidual level analysis (indicating that people were more willing to accept an
agreement if they thought it was more fairly arrived at) and from the dyadic
analysis (indicating that dyads with higher levels of procedural justice also
reported higher levels of willingness to accept the agreement). Finally, the
person in a dyad reporting higher levels of procedural justice also expressed more willingness to accept the outcome. These results support the hypothesis that procedural justice plays a significant role, distinct from the role of out
comes, in guiding individuals' judgments even in a bilateral, nonauthority
setting.
In these two studies, participants were told that the case would proceed to arbitration if no agreement was reached. The standard materials as well
as the law that students researched were designed to lead participants to
the conclusion that the expected value of the arbitration was below even
the least desirable outcome in the zone of possible agreement. If such arbitra
tion actually occurred, one party would likely gain as much as or more than
that party had gained via agreement, although the other party would lose
not only the gain made in the agreement but would be subject to additional
losses as well. Hence, over the long run, as with any expected utility calcula
tion, the immediate acceptance of the outcome was not necessarily the way to ensure the most gain for one's client; however, an acceptance of the agree
ment was the least risky way to ensure some gain for the client and/or to
ensure a low or fixed level of loss exposure. As per expected utility theory, parties to any legal dispute should only
move forward in the legal system when a proposed settlement amount is
lower than the expected value of the case as decided by legal authority.
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492 LAW & SOCIAL INQUIRY
Including legal costs such as attorneys' fees and court or forum fees in one's
expected utility calculations, however, often exerts pressure on parties to
settle because moving forward with disputes, over time, tends to lead to lower
expected outcomes. Indeed, legal scholars have suggested that in light of
the costs of pushing a case through the litigation process, if perfect infor
mation were available to parties, all cases would settle (Posner 2003; Korobkin
and Guthrie 1994; Priest and Klein 1984; Issacharoff 2002). Additionally,
expected utility theory does not include clients' risk preferences; many clients
prefer a certain settlement for a fixed sum over an uncertain judgment for
an unknown sum. The structure of the legal system, including its costs and
uncertainties, encourages cases to settle; in general, parties to disputes of
this type are better off negotiating an agreement than they are moving forward
to arbitration.
The results of these two studies suggest that increased levels of procedural
justice may encourage the acceptance of negotiated agreements rather than
proceeding to arbitration or another adjudicative setting, thereby providing
greater benefits both for the parties and the legal system. As we have already
noted, this conclusion must be viewed as preliminary. Because the data are
correlational, we cannot rule out the possibility that people were satisfied
with the outcome or more willing to accept it for other reasons, and these
assessments then in turn caused them to infer higher levels of procedural
justice. Nor can we rule out the possibility that a third variable, perhaps related to social motivation or to individual personality difference, may affect
perceptions of procedural fairness. An unambiguous demonstration of
causality requires an experimental demonstration or at least a longitudinal correlational design. The conclusions reached in this study are tentative
and need to be confirmed using an experimental approach.
What Is Procedural Justice in Negotiation?
What does procedural justice in negotiation entail? Procedural justice literature has identified four factors that typically play an important role in
assessment of procedural justice: input, neutrality, respect/politeness, and
trust. First, it is important to allow parties opportunities to state their argu ments and to make clear that those arguments are being listened to by
acknowledging them. Second, people value having an unbiased and factual
decision-making process in which the rules are applied in a consistent
manner. Third, they want to be treated with dignity and courtesy and to
have their rights acknowledged. Finally, people want to deal with people whose motives they trust. That is, they value people who act in good faith.
In Study 1 we found that three of these four procedural justice factors
shaped assessments of the overall fairness of the negotiation process. Those
elements were input, respect/politeness, and trust. Participants' ratings of
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 493
whether the other party listened to him or her were linked to overall
procedural justice judgments (Study 1, r = 0.40, p < .01). Second, overall
procedural justice assessments were significantly correlated with whether they were treated with courtesy (Study 1, r =
0.43, p < .01), whether an individual
felt that his or her client's rights were respected (Study 1, r = 0.48, p < .01),
and whether the other party cared about his or her client's satisfaction (Study 1, r =
0.41, p < .01). Finally, the assessments correlated significantly with trust
(whether the other attorney was trustworthy (Study 1, r = 0.62, p < .01),
whether the other party shared information (Study 1, r = 0.37, p < .01),
and whether the other party used deception (Study 1, r = -0.25, p < .01)).
Unsurprisingly, in the absence of a third-party decision maker, this
research uncovered no link between individuals' assessment that an unbiased
and factual decision-making process was at work and their assessment of
procedural justice. Because each party to the negotiation was clearly a
partisan player, it would be difficult to imagine that either could be viewed
as an unbiased decision maker; it is understandable that this factor would
not play a role in bilateral negotiations. This finding is consistent with the
prior demonstration by Molm, Takahaski, and Peterson (2003) that there
are aspects of negotiation that people do not view as unbiased or factual
in nature.
Implications for Legal Negotiation
The findings outlined support a view of negotiation behavior distinct
from both the "lawyer as shark" and the utility-maximization paradigms. The
findings suggest that when negotiators act in procedurally fair ways, they lose
nothing at all in their "bottom line" in a zero-sum setting, expand the negotia tion pie in a setting in which there is integrative potential, and in fact gain other important advantages in terms of agreement acceptance. Study 1 sug
gests that in a largely zero-sum situation in which the primary gain is realized
by reaching a mutually acceptable agreement, procedural justice could help to encourage such acceptance. Study 2 replicates those findings, as well as
showing that, when integrative potential exists but the parties are not jointly aware of the possibility, procedural justice could encourage the disclosure of
information that could lead to the value-creating opportunity and indeed
could encourage agreements that both expand the negotiation pie and split the surplus more equally. Thus, the wise negotiator, to achieve successful
outcomes, may want to act in procedurally just ways when dealing with others
in order to foster greater acceptance of the agreement and more disclosure
of value-creating opportunities. We do not doubt that maximizing gain and minimizing loss are ostensibly
the most important goals of the attorney agent. But procedural justice offers
both a complement to the tools in a rational actor's arsenal as well as an
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494 LAW & SOCIAL INQUIRY
alternative vision of the basic tenets of a negotiator. First, in order to obtain
the best potential negotiation outcomes (settlement over nonsettlement, as
in Study 1, or value-creating integrative over nonintegrative bargaining, as
in Study 2), a rational actor should treat others in a fair manner. Second, and perhaps more striking, this research challenges the premise at the heart
of the rational actor model: what drives people in their assessments of out
come is not just the gain maximizing/loss minimizing analysis of the economic
results that they achieve, but also how fairly they feel they have been treated
in the negotiation process. Thus, the real-world negotiator evaluates his or
her outcome not in purely economic terms of gain and loss but in process terms of fairness.
Of course, this finding does not, in and of itself, suggest that negotiators are not acting in their self-interest. It could easily be that they have learned
over time to react favorably to fairness because they have learned that reach
ing agreements is good for their own bottom line. In both studies, one way to gain was to reach an agreement within the zone of possible agreement.
Hence, factors that encouraged agreement helped people to maximize their
outcomes. Or it may be that people have recognized that procedural justice is often a signal that they ought to accept agreements since it demonstrates
the other party's willingness to sincerely seek the best outcomes in the
situation.
The previously reported examination of the subcomponents of pro cedural justice provides mixed support for a conclusion that the focus on pro cedural justice is a rational one. The major factor associated with procedural
justice was trustworthiness, which supports the argument that people may be concerned about the sincerity of their opposing negotiator. However, the
second factor was treatment with respect, which seems more consistent with
the arguments of the relational model of procedural justice, which stresses
that people are concerned about information concerning their status in the
eyes of others. Hence, these findings also suggest that people may care about
procedural justice for reasons that are unrelated to their desire to obtain
favorable outcomes. More generally, though, as noted above, these studies'
findings do not allow us clearly to distinguish among the various potential
psychological explanations for procedural justice effects. Further research is
needed to more systematically establish why procedural justice matters in
the bilateral negotiation context.
Implications for Legal Psychology
Legal psychology brings empirical findings to bear on the assumptions about human nature that underlie the law and legal culture. The image of
the effectiveness of the combative lawyer is one such image. Books that offer
negotiation advice repeatedly suggest that people are widely worried about
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Procedural Fairness, Outcome Acceptance, and Integrative Potential
being too soft and, as a consequence, fear "losing" in negotiations with others
(Fisher, Ury, and Patton 1981; Mnookin, Peppet, and Tulumello 2000). This
fear is central to the self-image of many lawyers, leading them to focus on
an adversarial mind-set that can limit their openness to cooperation and to
integrative solutions. Indeed, some commentators have expressed concern
that lawyers' slavish adherence to the adversarial model of zealous advocacy
may actually exacerbate, rather than ameliorate, the underlying conflict
between the parties (Gilson and Mnookin 1995). These results illustrate how, in yet another arena of law, empirical
psychological findings can have important implications for the functioning of the legal system. It is widely reported that only a minority of cases are
resolved by a court (Galanter and Cahill 1994; Kritzer 1986); the bulk of
legal disputes are resolved through some other mechanism?and there are
many legal disputes that never formally enter the court system. Mediation
and other processes account for some of these resolutions, but pure negotia
tion between the parties' counsel resolves a vast number of cases. A large
portion of lawyers' professional work consists of negotiating and settling their clients' legal disputes with other parties. In this instance, psychology addresses not the formal exercise of legal authority so often studied but the
many negotiations central to the lives of most lawyers. It supports the argu ment that, in such settings, even as they operate to some degree outside of
or in the shadow of the formal legal system (Mnookin and Kornhauser 1979),
lawyers and parties in the legal system would benefit from adopting a stance
of procedural fairness.
Although they are not labeled as "procedural justice" per se, many ele
ments relating to the fairness of process are contained in discussions of effec
tive negotiation strategies. For example, the seminal negotiation book Getting to Yes (Fisher, Ury, and Patton 1981) touts the importance of "separating the people from the problem" (17, 32-35), suggesting active listening and
general courtesy, corresponding to input and respect/politeness above, as
important tactics for an effective negotiator. Similarly, in Beyond Winning, Mnookin and colleagues (2000, 47) suggest the importance of "demonstrating an understanding of the other side's needs, interests, and perspective, without
necessarily agreeing," which corresponds to the criterion of input discussed
above.
The findings of this study provide empirical support for these previous
arguments about effective negotiation behavior and provide a conceptual framework within which to think about how to design effective negotiation
strategies from a procedural justice perspective. Such efforts will benefit from
the existence of a literature giving considerable guidance about what pro
cedural justice means in formal and informal legal procedures (Lind and Tyler
1988; Shestowsky 2004). An understanding of how procedural justice confers
benefits on a negotiator is a starting point for those looking for effective
strategies for successful negotiation.
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496 LAW & SOCIAL INQUIRY
OVERVIEW OF PROBLEM AND EXPLANATION OF INTEGRATIVE MEASURES
In this exercise, each student was randomly assigned a role as a lawyer for either a homeowner or a contractor in a
dispute over a contract for the
construction of an in-ground custom-designed swimming pool. Each party has a grievance with the other party: the homeowner is angry because the
swimming pool was not built according to contract specification and the
contractor has not yet received full payment for the project and is anxious
to be paid. A desirable outcome for the homeowner in this setting involves addi
tional work performed by the contractor on the swimming pool, while
a desirable outcome for the contractor involves additional payment by the
homeowner to the contractor. Typically, the homeowner wants as much addi
tional work performed as possible while paying as little money as possible to the contractor, whereas the contractor wants as much money as possible
from the homeowner while performing as little work as possible. The agree ments negotiated uniformly involved some amount of work performed by the contractor for some amount of payment by the homeowner. Items that
could be negotiated included the construction of pool steps, removal or
replacement of a diving board, construction of a small or large fence, installa
tion of automatic or portable sweepers, replacement of tile, and a variety of smaller items, including warranty and pool chemicals. The monetary value
of the agreement to the homeowner consisted of the value of the work per formed minus the amount of money paid, whereas the monetary value of
the agreement to the contractor consisted of the amount of money paid minus
the cost of the work performed. In Study 1, as we note in the body of the article, the negotiation problem
was largely distributive. The high negative correlation between outcomes
within dyads (r =
?.96, p < .001) shows that for every dollar of value received
by one party, the other party lost approximately one dollar of value. In Study
2, we added an integrative element to the negotiation problem in an effort
to expand the negotiation pie that was available to negotiators. Specifically, old tiles that the homeowner wanted replaced were not valuable in any way to the homeowner but had significant salvage value to the contractor. Adding the fact that the tiles had some worth to this problem offered an opportunity for negotiators to create extra value that had not existed in the problem's
previous incarnation. However, in order to receive permission to take the
tiles, the contractor had to reveal in some manner a preference for having the tiles. Once that preference was revealed, parties could bargain over the
value of the tiles and how (and whether) that extra created value would
be distributed.
We operationalize integrative agreements in three ways in Study 2. First, we consider solely whether information was exchanged that related to the
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Procedural Fairness, Outcome Acceptance, and Integrative Potential 497
substance of the integrative item. As we note in the body of our article, such an exchange does not mandate that an integrative solution was
achieved. However, it does indicate a typically necessary step in crafting an
integrative solution?that of sharing some information about one's prefer
ences that can lead to joint value either by allowing interests to be transparent, so that options may be generated that are valuable to both parties, or by
allowing the exploitation of differing interests.
Second, we consider the total value of the agreements. This measures
the size of the pie that has been created. In any negotiation setting where
there is potential for integrative agreement, the total value of an integrative
agreement to both parties should be more than the total value of a distributive
agreement in the same setting. For that reason, we measure the total monetary
value of the agreement to each side and then sum those values to reach a
total monetary value of the agreement. Agreements that generate more total
value have expanded the resource pool that is available, thereby reflecting one measure of whether integrative rather than distributive bargaining has
occurred.
Third, because there is a tension between creating and claiming value?
and one could argue that a one-sided creation and full claiming of value
does not really represent the spirit of integrative bargaining as described in
the literature?we consider the difference between the agreements' values.
As scholars have noted, there is always a tension between the creation of
value and the distribution of it. For example, one party might use differing
preferences to create value but do so in a way that allows that party to claim
all of the value for him- or herself. For that reason, we look to the differences
in the values of the agreement, using Pareto-optimality as a measure of inte
grative success. Pareto-optimal agreements are those in which neither party could be better off without making the other party worse off; that is, the
agreements fall along the value curve of potential agreements at the most
mutually beneficial spot for the parties. Here, we measure that simply by
measuring the differences between the monetary value of the agreements.
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