Mental Budgeting and Integrated Outcome Editing Intervention by a Neutral Third-Party in Multi-Issue Negotiation

My bachelor thesis utilized a scenario-based approach to investigate how mental budgeting, limit setting, and third-party mediation affect negotiation outcomes.

Abstract

Building on recent findings from research on mental accounting in multi-issue negotiation, the current online study (𝑁 = 192) took a scenario-based approach to investigate how the location of the Zone of Profitable Payoffs (ZOPP) affects joint outcomes, approaches of mental budgeting, and the way of outcome editing negotiators engage in. Additionally, the current study investigated whether negotiators could be nudged towards more integrated outcome editing by means of an intervention delivered by a neutral third-party mediator. It was predicted that participants, who received pay-off tables with the ZOPP located between issues, would be prompted towards comprehensive mental budgeting, and engage in integrated outcome editing. In contrast, participants who received pay-off tables with the ZOPP located within issues, were expected to be prompted towards minimal mental budgeting, engage in more segregated outcome editing, and in turn propose final offers that yield lower joint outcomes than participants from the first group. Participants who received the integrated outcome editing intervention were expected to engage in more integrated outcome editing than participants who did not. Contrary to these predictions, participants from ZOPP-between conditions proposed final offers that, on average, yielded twice the value of joint outcomes than final offers by participants of ZOPP-within conditions. Irrespective of their location-of-ZOPP condition, most participants engaged in minimal rather than comprehensive mental budgeting, and the approach of mental budgeting did not affect joint outcomes. The way of outcome editing was independent of the location of ZOPP, and the integrated outcome editing intervention remained ineffective. In line with expectations, integrated outcome editing was associated with higher joint outcomes and partially mediated the relationship between the location of ZOPP and the joint outcome from final offers. Keywords: negotiations; mediation; mental budgeting; outcome editing; ZOPP