Thinking and Deciding

NEGOTIATION 439
candid about what was important. The same nonoptimal outcome can result if the
parties negotiate about each dimension separately. The possibilities for trades that
benefit both sides would simply not be recognized.
The more specific you can be about relative importance, the better. If, for example,
two roommates are negotiating about doing the housework, it helps to be able to
say, “Two hours of cleaning are equivalent to one hour of cooking, for me, because
I hate cleaning so much.” If the other roommate feels the opposite, then the optimal
solution is for one to do all the cooking and the other all the cleaning. This is far
better than splitting everything equally.
Note that it is still possible to bargain hard while being honest about the relative
importance of the dimensions to you. The point of honesty about relative importance
is to make sure that you get to the Pareto frontier. The hard bargaining is about where
on that frontier you wind up.
The danger here is real. Many laboratory studies show that college students
left to their own devices will not arrive at Pareto-optimal solutions, unless they are
given specific advice about how to talk about their tradeoffs or unless they have
experience in the same situation (Bazerman, Magliozzi, and Neale, 1985; Pruitt and
Lewis, 1975). Even in international negotiations (such as the Uruguay round of the
General Agreement on Tariffs and Trade), experienced negotiators make the mistake
of “settling one issue at a time” — first agriculture, then telecommunications, and so
forth — when it is possible that these could be handled integratively. (An exception
to the usual muddling was the Camp David negotiation mediated by President Carter,
as described by Raiffa, 1982.)
Negotiations of all sorts — simple and integrative — often founder on differences
between the parties in their perception of what is fair. Nobody wants to accept an unfair
deal. Much of the discussion in negotiations is about fairness. Even when selling
a house, the parties can quibble about the price of similar houses on the market. They
assume here that the fair price is the market price. In more complex negotiations, the
parties may have different conceptions of fairness. In a labor negotiation about the
salary increases of workers, for example, several standards of fairness are available
— wages of similar workers in other companies, wage increases of other workers (in
dollars or percentages), the rate of inflation, the income of the firm, and so forth —
and each side can be expected to choose the standard that gives it a better outcome
(Elster, 1989b, ch. 6).
When the parties learn more about their situation, a kind of polarization effect
(Chapter 9) can occur, in which each party uses every new piece of information
that provides a favorable view of what is fair, while ignoring information favoring
the other side. As a result, provision of information to the parties increases the
difficulty of reaching agreement (Camerer and Loewenstein, 1993; Thompson and
Loewenstein, 1992).