Modeling counteroffer behavior in dyadic distributive negotiation

An experiment on dyadic distributive negotiation is presented that analyzes the role of the market price as a credible reference point in a bargain between a human buyer and a computerized seller implementing a contingent negotiation strategy. The market price had strong effects on the initial reservation and aspiration prices, and indirectly affected the settlement price and the number of negotiation cycles, but not the agreement likelihood. An explicit frame-related manipulation, induced by the instructions, did not yield significant effects. Two simulative models of the offer formation process, grounded on the behavioral decision approach, were proposed and evaluated. The results support the view of the negotiator as a limited information-processing decision-maker, and suggest the possibility of contingent selection of reference points.