New research from York University’s Schulich School of Business shows that quality – not just quantity – is important when it comes to attaining fair and successful outcomes in negotiations.
A research collaboration between Nicole Mead, associate professor of marketing at Schulich; Jay Zenkic, marketing lecturer at Deakin University in Melbourne, Australia; and Kobe Millet, associate professor of marketing at Vrije University in Amsterdam, the Netherlands, reveals that real-world stakes in business and other negotiations often consist of resources that vary in terms of quality, not just quantity. For example, corporate takeover negotiations can consist of both cash and stock, which can vary in quality. Yet, prior research only focused on how the quantity of money being offered affects negotiation success.
To test whether quality also matters, the researchers conducted three ultimatum game studies, commonly used to analyze how people negotiate with one another. The results of the studies showed that people reject quantitatively equal offers (i.e. half of the money in the pot) when those offers are qualitatively inferior (e.g. they receive coins, whereas the person making the offer receives banknotes).
“For researchers and practitioners who seek predictive accuracy and efficient outcomes, understanding that quantity and quality drive fairness is a boon for effective resource allocations,” says Mead. “Negotiators and allocators may face setbacks if they fail to consider the quality of the resources they allocate.”
As an example of this phenomenon, Mead cites divorce negotiations. Although they often follow a legislated 50:50 financial split of marital assets – in other words, they are quantitatively equal – the negotiations can still fail due to the challenge of allocating familial items that possess qualitative differences.
“Real-world negotiations are likely to vary in both quality and quantity at the same time,” says Mead, “so the study of how people make trade-offs may be a compelling avenue for future research.”
The co-written study was published in the journal Judgment and Decision Making, in an article titled “Fairness is based on quality, not just quantity.”