The effectiveness of the carrot and the stick in increasing dyadic outcomes during duopolistic bargaining

Abstract

Bargaining is a form of decision making which occurs between two o r more individuals of some subhuman species of animals as well as human beings in dyads, multiperson groups, organizations, societies, and supranational systems. This article deals with human dyads.Theory and research on the impact of threats on bargaining outcomes are mixed: Some studies find that the use of threats impairs outcomes relative to conditions in which no threats are made; other studies find that threats may be used for signaling and coordination, improving outcomes. Similarly, the literature on the effects of promises is mixed Some studies suggest that promises lead to trust and openness, and lead to more profitable bargaining; other studies find that promises are used to deceive and manipulate the other bargainer, leading to leas profitable outcomes. There is little literature on the joint effects of threats and promises in dyadic bargaining.In the present study, bargainers playing a duopoly cross-maximization game (analogous to the prisoner's dilemma) were provided with either threat messages (T), promise messages (P), threat and promise messages (TP), or no messages, in a factorial design.Dyad profits were ordered T, TP, P, N; that is, dyads with threats made the highest bids and earned the greatest payoffs. Dyad members in the P and T P conditions used the promise messages deceptively to exploit each other. Dyad members in the T and T P conditions used the threat messages to coordinate choices at mutually profitable levels and punished defections from these high levels by the imposition of fines. Dyad outcomes were linearly related to the use of fines and the number of exploitative promises made.

Inhibiting effects of reciprocation wariness on interpersonal relationships.

“…In contrast, consistent with findings that cooperation is inhibited by a fear of being taken advantage of (Insko et al, 1990), cooperative communication had little or no enhancing effect on the cooperative behavior of high-wary individuals. High-wary persons, who have a general fear of exploitation in interpersonal relationships, appear more apt than others to view promises of cooperation simply as manipulative ploys (cf., Stech, McClintock, & Moss, 1984).…”

The effects of commitment to threats and promises upon bargaining behaviour and outcomes

“…Some researchers have observed that promises produce superior joint outcomes because they enhance feelings of mutual trust between parties (Baldwin, 1971a, b;Raven and Kruglanski, 1970; Schlenker et al, 1976; Tedeschi, 1970). The findings of others indicate that promises tend to be employed exploitatively to mislead or deceive others, and hence they lower joint dyadic outcomes (Kelley, 1966; Pilisuk and Skolnick, 1968;Stech et al, 1984).…”

“…Youngs (1986) has shown that conflict spirals, which are at least in part responsible for low joint outcomes, may result from matching behaviour in the exchange of threats, a pattern which would follow from Gouldner's (1960) norm of reciprocity. Other research suggests that threats lead to superior outcomes because they are being used to signal the threatener's willingness to reach some form of accommodation with the threatened (Borah, 1963 Smith and Anderson, 1975;Stech, McClintock and Moss, 1984).…”

“…Predicted side-bet commitment to promises C. G. McClintock, F. J. Stech and J. K. Beggan Prior research on the effects of promises has observed that bargainers sometimes use non-contingent promises for purposes of exploitation, namely, to promise one thing and then to lower this bid so as to take advantage of other (Stech et al, 1984). In the present research, it is assumed that as the size of the side-bet lost for violating a promise increases, the credibility of the promise should increase.…”

Resolving social conflicts through hostage posting: Theoretical and empirical considerations.

“…Previous research on the overall effects of promises and threats, most of which was conducted in the somewhat different context of bargaining, has produced mixed results (for reviews see McClintock et al, 1987; Stech, McClintock, & Moss, 1984; Tedeschi, 1970). Some findings suggest that threats may impair actors' outcomes by producing hostility and inspiring a spiral competitiveness (Youngs, 1986), whereas other studies show that threats may reinforce cooperative behavior under the contingency that accommodation to compromise is also signaled (Stech et al, 1984). Similarly, promises are not always effective as they either may not be trusted or may be interpreted as a weakness.…”