The role of history in negotiations is a double-edged sword.
Although different sides can develop trust over time, there are also countless instances of prolonged feuds that developed because of conflicting histories. A prime example is World War II, which was fought in part to rectify perceived wrongs from the past. The phenomenon also extends to day-to-day situations such as sharing utility costs with a roommate or jockeying for position at grocery store checkout lanes.
New research published in the Journal of Economic Behavior and Organization examines how past histories are harmful in negotiations, particularly when an event in the past benefited one party at the other's expense. In those situations, the party that got the short end of the stick tends to believe that they are owed retribution. The party that triumphed in the past, in contrast, tends to think that the past is irrelevant-- bygones should be treated as bygones.
"If you look at the history of world conflict, as well as conflicts between individuals, a surprising fraction revolves around different interpretations, and invocations, of the past," said George Loewenstein, the Herbert A. Simon University Professor of Economics and Psychology at Carnegie Mellon University.
For the study, Loewenstein and the University of Vienna's Linda Dezső, the Austrian Institute of Technology's Jonathan Steinhart, Tilburg University's Gábor Neszveda and Barnabás Szászi of the Eötvös Loránd University ran two, two-staged experiments in which 392 participants worked as pairs answering trivia questions. Their joint earnings were equal to the sum of the correct answers provided by both members of the pair.
In the first stage of the first experiment, the control group's earnings were split equally, but for those in the asymmetric history group, the joint earnings were allocated entirely to the person who answered more questions correctly. In the second stage of the experiment, the two participants again worked on trivia questions, earned money for their joint score, and then negotiated over how to divide their earnings. Revealing the potentially pernicious effect of a shared history, those with asymmetric histories reached an impasse in the second negotiation approximately three times more often than those with symmetric histories.
The second experiment was similar except that in the first stage the joint earnings of all pairs were allocated asymmetrically. In the second stage, each participant then played either with the same or different partner than they had played with in the first stage, ensuring in all cases that a first-stage loser was paired with a winner. Here, the researchers found those with shared asymmetric histories were much more likely to research impasse than those who had experienced similar past events, but not with the person they were negotiating with.
"History is a two-edged sword," said Dezső, the study's lead author and a Fulbright Fellow at Carnegie Mellon when the research was conducted. "Having a shared history can sometimes promote harmony, but when the history was asymmetric it can often result in conflicting interpretations of what happened and views about what it should mean for the present."
In such situations, she continued, "a shared history can be a formula for conflict."
This is a follow-up study to research previously conducted by Dezső and Loewenstein on personal loans -- how they go awry and lead to misunderstandings between borrowers and lenders.
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