A positive theory of legal negotiation

Georgetown Law Journal

Volumn 88, Issue 6, 2000, Pages 1789-1830

  Korobkin, Russell ^a  

^a UNIVERSITY OF ILLINOIS AT URBANA CHAMPAIGN   (United States)

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EID: 23044520502     PISSN: 00168092     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (165)

1. See, e.g., HOWARD RAIFFA, THE ART AND SCIENCE OF NEGOTIATION 127-28 (1982) (addressing the question "who should make the first concrete offer?").
2. See, e.g., THOMAS F. GUERNSEY, A PRACTICAL GUIDE TO NEGOTIATION 38-39 (1996).
3. See, e.g., Gary Goodpaster, A Primer on Competitive Bargaining, 1996 J. DISP. RESOL. 325, 349-68 (describing 55 negotiating tactics).
4. Most negotiation texts, in fact, explicitly decline to provide a theory of the negotiating process. See, e.g., CHARLES B. CRAVER, EFFECTIVE LEGAL NEGOTIATION AND SETTLEMENT 3-4 (2d ed. 1993) ("This book does not attempt to define a specific negotiating style . . . . Given the diverse personalities possessed by lawyers, it would be impossible to provide a generally-applicable framework.").
5. Cf. Carrie Menkel-Meadow, Legal Negotiation: A Study of Strategies in Search of a Theory, 1983 AM. B. FOUND. RES. J. 905, 910 (finding then-current legal negotiation literature "largely atheoretical and focused primarily on suggesting specific strategies").
6. See, e.g., JEFFREY Z. RUBIN & BERT R. BROWN, THE SOCIAL PSYCHOLOGY OF BARGAINING AND NEGOTIATION 198 (1975) (categorizing negotiators as "cooperative versus individualistic versus competitive");
7. GERALD R. WILLIAMS, LEGAL NEGOTIATION AND SETTLEMENT 18-40 (1983) (studying negotiator behavior and categorizing negotiators as "cooperative" or "competitive" types).
8. See, e.g., Goodpaster, supra note 3, at 346; WILLIAMS, supra note 6, at 48.
9. See, e.g., WILLIAMS, supra note 6, at 21.
10. See Menkel-Meadow, supra note 5, at 922-23 (criticizing competitive/cooperative dichotomy because it focuses on tactics or behaviors without providing any broader view of goals).
11. See, e.g., WILLIAMS, supra note 6, at 41, 47 (concluding that "a negotiator's effectiveness is NOT determined by the pattern [cooperative or competitive] he follows, but rather by what he does with that pattern") (emphasis in original).
12. See, e.g., ROBERT H. MNOOKIN ET AL., BEYOND WINNING: How LAWYERS HELP CLIENTS CREATE VALUE IN NEGOTIATION (forthcoming 2000); RAIFFA, supra note 1, at 33;
13. Gerald B. Wetlaufer, The Limits of Integrative Bargaining, 85 GEO. L.J. 369, 370 (1996);
14. Leigh Thompson, The Influence of Experience on Negotiation Performance, 26 J. EXPERIMENTAL Soc. PSYCHOL. 528, 528 (1990);
15. see also THOMAS C. SCHELLING, THE STRATEGY OF CONFLICT 21 (1980) (distinguishing between the "distributive" and "efficiency" aspects of bargaining).
16. See, e.g., MAX H. BAZERMAN & MARGARET A. NEALE, NEGOTIATING RATIONALLY 16 (1993) (contrasting distributive and integrative negotiation);
17. DAVID A. LAX & JAMES K. SEBENIUS, THE MANAGER AS NEGOTIATOR 33 (1986) ("An essential tension in negotiation exists between cooperative moves to create value and competitive moves to claim it.").
18. Cf. Carrie Menkel-Meadow, Toward Another View of Negotiation: The Structure of Problem Solving, 31 UCLA L. REV. 754, 818 (1984) (contrasting competitive-cooperative dichotomy, which focuses on "means," with adversarial-problem solving dichotomy, which focuses on "ends").
19. See generally Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089, 1128 (1972) (referring to Claude Monet's paintings of the Cathedral at Rouen).
20. See Wetlaufer, supra note 11, at 373-74.
21. See infra Part I.E for a more complete discussion.
22. The example is borrowed from Gerald Wetlaufer. See Wetlaufer, supra note 11, at 379.
23. See id.
24. Undoubtedly, though, such opportunities often do exist in legal negotiation. See infra Part I.E.
25. Cf. HERBERT M. KRITZER, LET'S MAKE A DEAL: UNDERSTANDING THE NEGOTIATING PROCESS IN ORDINARY LITIGATION 41-42 (1991) (finding that in surveyed litigation negotiations, 72% of offers/ demands concerned only money).
26. Cf., e.g., RAIFFA, supra note 1, at 37.
27. See infra Figure 1.
28. There may be reasons external to the current transaction that would cause a party to refuse to accept an agreement at some amounts located within the bargaining zone. This problem is discussed infra Part II.
29. "Legal negotiation," of course, generally is described by an agent - the lawyer - negotiating on behalf of a principal - the client. For simplicity's sake, this article treats each lawyer-client dyad as a unitary entity, thus implicitly assuming that lawyers have the capacity and the commitment to act as perfect agents for their principals. When this assumption is relaxed, the analysis provided here does not change appreciably.
30. The process of agreeing on a specific deal point is considered infra Part II.
31. See, e.g., Vandra L. Huber & Margaret A. Neale, Effects of Cognitive Heuristics and Goals on Negotiator Performance and Subsequent Goal Setting, 38 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 342, 349, 354 (1986) (finding that experimental subjects given high minimum profit requirements for transactions achieved more profitable deal points than subjects given low minimum profit requirements).
32. Cf. Goodpaster, supra note 3, at 338 (observing that parties who fail to gather information that is needed to specify their alternatives weaken their bargaining position).
33. ROGER FISHER ET AL., GETTING TO YES 100 (2d ed. 1991).
34. For a brief primer on expected value calculations, see SCOTT PLOUS, THE PSYCHOLOGY OF JUDGMENT AND DECISION MAKING 79-83 (1993);
35. Russell B. Korobkin & Thomas S. Ulen, Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics, 88 CAL. L. REV. (forthcoming 2000).
36. I differentiate the concepts of BATNA and RP by focusing on the market (or objective) value of the BATNA and the difference between this and the negotiator's RP. If Esau's BATNA is trial, and trial has an expected value of $75,000, Esau's BATNA has an objective value of $75,000, but Esau's RP will be $50,000 if the costs, risk, and emotional strain of trial make reaching a negotiated settlement of $25,000 more desirable than litigating. Others have described the relationship between RPs and BATNAs in a somewhat different way, pointing out that the subjective value of the negotiator's BATNA is equivalent to his RP. See, e.g., Ian Ayres & Barry Nalebuff, Common Knowledge as a Barrier to Negotiation, 44 UCLA L. REV. 1631, 1642 (1997) (equating BATNAs and RPs);
37. Richard Birke & Craig R. Fox, Psychological Principles in Negotiating Civil Settlements, 4 HARV. NEG. L. REV. 15 n.62 (1999) (observing that reservation price is often used synonymously with BATNA). These authors might describe the same situation this way: because of the costs, risks, and strain of trial, the subjective value to Esau of going to trial is only $50,000, and thus, the value of Esau's BATNA and his RP are both $50,000. Nothing in my analysis turns on which linguistic approach is employed. Either way, Esau ultimately sets his RP at $50,000, and this establishes the lower bound of the bargaining zone.
38. Precisely how negotiators determine the difference in value between the subject of the negotiation and their BATNAs is inherently subjective and varies from individual to individual. What factors are most important in this decisionmaking exercise is the subject of a debate between those commentators who assume that negotiators are rational actors who maximize expected utility, see generally Robert D. Cooter & Daniel L. Rubinfeld, Economic Analysis of Legal Disputes and Their Resolution, 27 J. ECON. LITIG. 1067 (1989);
39. George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984), and those who believe psychological and emotional factors play an important role, see generally Birke & Fox supra note 30;
40. Chris Guthrie, Better Settle Than Sorry: The Regret Aversion Theory of Litigation Behavior, 1999 U. ILL. L. REV. 43;
41. Russell Korobkin, Inertia and Preference in Contract Negotiation: The Psychological Power of Default Rules and Form Terms, 51 VAND. L. REV. 1583 (1998);
42. Russell Korobkin & Chris Guthrie, Psychological Barriers to Litigation Settlement: An Experimental Approach, 93 MICH. L. REV. 107 (1994) [hereinafter Korobkin & Guthrie, Psychological Barriers];
43. Russell Korobkin & Chris Guthrie, Psychology, Economics, and Settlement: A New Look at the Role of the Lawyer, 76 TEX. L. REV. 77 (1997);
44. Jeffrey J. Rachlinski, Gains, Losses, and the Psychology of Litigation, 70 S. CAL. L. REV. 113 (1996).
45. See infra Part I.B.
46. See George Loewenstein et al., Self-Serving Assessments of Fairness and Pretrial Bargaining, 22 J. LEGAL STUD. 135, 150 (1993) (finding that subjects playing the role of plaintiffs in a fact-intensive case predicted on average a verdict more than 50% larger than subjects playing the role of the defendant);
47. see also Linda Babcock et al., Biased Judgments of Fairness in Bargaining, 85 AM. ECON. REV. 1337, 1340 tbl.2 (1995) (indicating the differences between what subjects playing the role of plaintiffs and subjects playing the role of defendants found to be fair awards).
48. See generally Cooter & Rubinfeld, supra note 31, at 1075-76.
49. See infra Figure 2.
50. See Cynthia S. Fobian & Jay J. J. Christensen-Szalanski, Ambiguity and Liability Negotiations: The Effects of the Negotiators' Role and the Sensitivity Zone, 54 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 277, 288-95 (1993). The author's experimental tests in the litigation context support the theoretical predictions of the Einhorn-Hogarth ambiguity model.
51. See Hillel J. Einhorn & Robin M. Hogarth, Ambiguity and Uncertainty in Probabilistic Inference, 92 PSYCHOL. REV. 433 (1985).
52. See generally Joan F. Brett et al., Stairways to Heaven: An Interlocking Self-Regulation Model of Negotiation, 24 ACAD. MGMT. REV. 435, 441-42 (1999) (observing that when there is discrepancy between what negotiator desires and what his opponent offers, negotiator often adjusts his goals to fit his environment).
53. Cf. RAIFFA, supra note 1, at 129 (noting that negotiator's RP might shift during negotiations if the opponent provides information that helps reassess other opportunities or the value of negotiation's subject matter).
54. See infra Figure 3.
55. Cf. MNOOKIN ET AL., supra note 11 ("Because of the importance of evaluating the litigation alternative, each party is constantly trying to shape the other party's perceptions of the expected value of proceeding with litigation.") (italics in original).
56. This is based on David's estimate that Goliath stands a 50% chance of winning a $100,000 verdict (50% × $100,000 = $50,000) plus the $15,000 premium Goliath estimates David would be willing to pay to avoid the risks and costs of trial.
57. See infra Figure 4.
58. Empirical research shows that in litigation individual plaintiffs bringing a single suit often oppose organizational defendants that defend many suits. See KRITZER, supra note 20, at 75-76. A defendant with such a diversified litigation portfolio is less likely than the plaintiff to be risk averse, thus giving the defendant an advantageous RP.
59. Cf. Kathleen M. O'Connor & Peter J. Carnevale, A Nasty But Effective Negotiation Strategy: Misrepresenting a Common Value Issue, 23 PERSONALITY & Soc. PSYCHOL. BULL. 504, 511 (1997) (finding that negotiators who misrepresented what they valued achieved more favorable negotiation results).
60. The Model Rules of Professional Conduct make clear that actively misrepresenting one's RP does not violate the lawyer's professional ethical responsibilities. See MODEL RULES OF PROFESSIONAL CONDUCT Rule 4.1 (1995).
61. This is the fundamental insight offered in Robert Cooter et al., Bargaining in the Shadow of the Law: A Testable Model of Strategic Behavior, 11 J. LEGAL STUD. 225, 231 (1982).
62. In this case, such questions serve the purpose of building a relationship. The value of this for surplus allocation is considered infra Part II.D.
63. See supra Part I.B.2; cf. MNOOKIN ET AL., supra note 11 (describing "lemons problem" caused by asymmetric information).
64. See supra Part I.B.2.
65. See Leigh Thompson & Reid Hastie, Social Perception in Negotiation, 47 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 98, 107-08 (1990).
66. See, e.g., MNOOKIN ET AL., supra note 11.
67. See supra Part I.B.
68. Alternatively, a commitment can also be understood as an attempt by one negotiator to unilaterally change his RP, not because he has sought out alternatives that change the underlying fundamentals that should dictate his RP, but by pure force of will. See SCHELLING, supra note 11, at 27 ("[Commitments permanently change, for all practical purposes, the 'true' reservation prices.").
69. See infra Figure 5.
70. Cf. SCHELLING, supra note 11, at 36 (posing fundamental question, "[H]ow can one commit himself in advance to an act that he would in fact prefer not to carry out . . .?").
71. Cf. id. at 22 ("If a man knocks at a door and says that he will stab himself on the porch unless given SlO, he is more likely to get the $10 if his eyes are bloodshot.").
72. Cf. id. at 24 (suggesting buyer can convincingly pledge to pay no more than $16,000 for house he values at $20,000 if he makes enforceable bet with third party to forfeit $5000 if he pays more than $16,000 for house).
73. Manufacturers often use "most-favored-nation" clauses as a commitment technique. Entering a transaction below a certain price then requires them to give rebates to other clients, raising the costs of transacting at what would otherwise be a beneficial price. See MNOOKIN ET AL., supra note 11.
74. See SCHELLING, supra note 11, at 29 ("A potent means of commitment . . . is the pledge of one's reputation.").
75. Notice that, if the second party believes the first party's threat is credible, it would be irrational for him to make a countercommitment that, if firm, would eliminate the positive bargaining zone. If the second party believes that the first party's threat might be a bluff, however, countercommitting might be a highly rational strategy, although risky. For an interesting description of an Eastern Airlines labor-management negotiation involving irrational mutual commitments, see BAZERMAN & NEALE, supra note 12, at 19-20.
76. Cf. AVINASH DIXIT & SUSAN SKEATH, GAMES OF STRATEGY 532 (1999) (claiming that bargainers will make concessions to avoid "decay" (i.e., shrinking of the bargaining zone) or "impatience" (i.e., opportunity costs of haggling));
77. Ian Ayres, Further Evidence of Discrimination in New Care Negotiations and Estimates of Its Cause, 94 MICH. L. REV. 109, 124 (1995)
78. Peter C. Cramton, Dynamic Bargaining with Transaction Costs, 37 MGMT. SCI. 1221, 1221 (1991) (constructing a model of bargaining behavior that assumes both that negotiators discount future payoffs and that bargaining has transaction costs).
79. Game theorists have demonstrated that given these facts and certain restrictive conditions, it would be rational for Goliath to accept a $70,000 offer from David rather than bargain further. For a nontechnical description of the "Rubinstein bargaining solution," see AVINASH K. DIXIT & BARRY J. NALEBUFF, THINKING STRATEGICALLY: THE COMPETITIVE EDGE IN BUSINESS, POLITICS, AND EVERYDAY LIFE 300-01 (1991) (describing the model developed by economist Ariel Rubinstein).
80. WILLIAM URY, GETTLNG PAST NO 105-29 (rev. ed. 1993).
81. See infra Part II.
82. Cf. MNOOKIN ET AL., supra note 11 (observing that "commitments may offend some bargainers' notions of process legitimacy" and thus "damage relationships").
83. FISHER ET AL., supra note 28, at 12.
84. See supra notes 11-20 and accompanying text.
85. See, e.g., MNOOKIN ET AL., supra note 11.
86. See infra Figure 6.
87. It is possible, depending entirely on context, that expanding the bargaining zone will have the collateral effect of helping one party to negotiate a more favorable deal point than he would have otherwise. Thus, while expanding the bargaining zone increases both parties' expected value of an agreement, it will not necessarily result in both parties obtaining more actual value in a particular circumstance.
88. See, e.g., DONALD G. GIFFORD, LEGAL NEGOTIATION: THEORY AND APPLICATIONS 32, 170 (1989).
89. See, e.g., FISHER ET AL., supra note 28, at 10; LAX & SEBENIUS, supra note 12, at 63-70.
90. See Leigh L. Thompson, Information Exchange in Negotiation, 27 J. EXPERIMENTAL SOC. PSYCHOL. 161, 175-76 (1991) (finding that negotiators who exchanged more information reached more integrative negotiation outcomes); Thompson & Hastie, supra note 50, at 110-11 (same); cf. BAZERMAN & NEALE, supra note 12, at 90-92 (advising negotiators to "share information" and "give away information" in order to reach integrative agreements).
91. Cf. RAIFFA, supra note 1, at 144 (noting that if both sides strategically misrepresent their value tradeoffs, inefficient contracts will result).
92. See MNOOKIN ET AL., supra note 12.
93. See, e.g., LAX & SEBENIUS, supra note 12, at 38-41; Wetlaufer, supra note 11, at 371.
94. This would be the case in a perfectly competitive market where many buyers can costlessly shop among many sellers for the same product. For an example, see infra Part II.c.1.
95. See generally RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 13 (4th ed. 1992) (explaining the concept of Pareto superiority).
96. Admittedly, the "commitment" tactics described infra Part II.D.1, could be described as tactics that use economic leverage in pursuit of surplus allocation, rather than as tactics that seek to unilaterally redefine the bargaining zone. That commitment tactics plausibly could be classified in either category demonstrates that the categories are not clearly distinct at the margins. Classifying such tactics under "zone definition" is preferable, because this maintains the useful dichotomy between tactics that rely on economic rationality (zone definition) and those that rely on conformity with social norms (surplus allocation).
97. Cf. Richard H. Thaler, Anomalies: The Ultimatum Game, J. ECON. PERSP. 203, 203 (Fall 1988) (concluding that "in general, consumers may be unwilling to participate in an exchange in which the other party gets too large a share of the surplus");
98. Sally Blount White & Margaret A. Neale, The Role of Negotiator Aspirations and Settlement Expectancies in Bargaining Outcomes, 57 ORGANIZATIONAL BEHAV. & HUM. DECISION PROCESSES 303, 307 (1994) (predicting that "when excessive perceived inequity exists, individuals who place especially large amounts of disutility on inequity may choose impasse over a positive outcome").
99. See, e.g., ELAINE WALSTER ET AL., EQUITY: THEORY AND RESEARCH 17-18 (1978).
100. See id. at 18. Perhaps, for the purposes of this analysis, the most relevant way an individual can restore equity is by "altering his own or his partner's relative gains." Id.
101. Richard Thaler, Mental Accounting and Consumer Choice, 4 MARKETING SCI. 199, 205 (1983).
102. Steven Lubet, Notes on the Bedouin Horse Trade or "Why Won't the Market Clear, Daddy?", 74 TEX. L. REV. 1039, 1039-42 (1996).
103. See id. at 1042-49.
104. See id. at 1050.
105. For reviews of the literature on the game, see Colin Camerer & Richard H. Thaler, Anomalies: Ultimatums, Dictators, and Manners, J. ECON. PERSP. 209, 209 (Spring 1995),
106. and Alvin E. Roth, Bargaining Experiments, in THE HANDBOOK OF EXPERIMENTAL ECONOMICS 253, 282-302 (John H. Kagel & Alvin E. Roth eds., 1995).
107. See generally Werner Güth & Reinhard Tietz, Ultimatum Bargaining Behavior: A Survey and Comparison of Experimental Results, 11 J. ECON. PSYCHOL. 417 (1990);
108. Daniel Kahneman et al., Fairness as a Constraint on Profit Seeking: Entitlements in the Market, 76 AM. ECON. REV. 728 (1986);
109. Richard H. Thaler, Anomalies: The Winner's Curse, 2 J. ECON. PERSP. 191 (Spring 1988).
110. See Korobkin & Guthrie, Psychological Barriers, supra note 31, at 144-47.
111. See George F. Loewenstein et al., Social Utility and Decision Making in Interpersonal Contexts, 57 J. PERSONALITY & Soc. PSYCHOL. 426, 432 (1989).
112. See Elizabeth Hoffman et al., Preferences, Property Rights, and Anonymity in Bargaining Games, 7 GAMES & ECON. BEHAV. 346, 370 (1994).
113. See generally id. at 348-50.
114. Experimental design affects the generosity of dictators, but regardless of design a significant number always offer non-zero distributions to the powerless recipient. See, e.g., Camerer & Thaler, supra note 87, at 213-14; Robert Forsythe et al., Fairness in Simple Bargaining Experiments, 6 GAMES & ECON. BEHAV. 347 (1992); Hoffman et al., supra note 91, at 362-66; Roth, supra note 87, at 298-302.
115. See Elizabeth Hoffman & Matthew L. Spitzer, The Coase Theorem: Some Experimental Tests, 25 J. L. & ECON. 73, 91-95 (1982).
116. Cf. WALSTER ET AL., supra note 81, at 17-18 (claiming that people participating in inequitable relationships become distressed, whether they are victims or beneficiaries of inequity, and try to eliminate the distress by restoring equity).
117. Cf. Thomas Schwinger, Just Allocations of Goods: Decisions Among Three Principles, in JUSTICE AND SOCIAL INTERACTION 95, 95 (Gerald Mikula ed., 1980) ("The application of norms can be seen as a substitute for bargaining. . . .").
118. See, e.g., Helmut Lamm & Egon Kayser, An Analysis of Negotiation Concerning the Allocation of Jointly Produced Profit or Loss: The Role of Justice Nonas, Politeness, Profit Maximization, and Tactics, 8 INT'L J. GROUP TENSIONS 64, 66 (1978) (recognition of limited number of fairness norms narrows the extent of conflict).
119. See, e.g., Loewenstein et al., supra note 90, at 439 ("Most disputes . . . call into play competing norms of distributive justice.").
120. Cf. Schwinger, supra note 96, at 107 (finding no empirical evidence on whether and when people compromise between justice norms or use only one).
121. See Alvin E. Roth & J. Keith Murnighan, The Role of Information in Bargaining: An Experimental Study, 50 ECONOMETRICA 1123, 1129-30 (1982).
122. Lamm & Kayser, supra note 97, at 78; see also David M. Messick & Keith P. Sentis, Fairness and Preference, 15 J. EXPERIMENTAL Soc. PSYCHOL. 418, 428-29 (1978) (finding subjects thought larger sum of money was fair compensation for task if they had performed task than if another person had performed it).
123. See supra note 32 and accompanying text.
124. See Babcock et al., supra note 33, at 1338-40 & tbl.2; see also Loewenstein et al., supra note 33.
125. See Babcock et al., supra note 33, at 1339-40 & tbl.1.
126. See Babcock et al., supra note 33, at 1342; see also Lamm & Kayser, supra note 97, at 78 (calling this phenomenon "egotistical interpretation"); Messick & Sentis, supra note 101, at 432 (finding an "egocentric shift" in fairness judgments).
127. See, e.g., Messick & Sentis, supra note 101, at 432 (finding evidence that persons who have done a low amount of work prefer equal distributions of a stake while persons who have done a high amount of work prefer distributions based on contributions).
128. See, e.g., Kristina A. Diekmann et al., Self-Interest and Fairness in Problems of Resource Allocation: Allocators Versus Recipients, 72 J. PERSONALITY & SOC. PSYCHOL. 1061, 1070-71 (1997) (finding that subjects asked to make "fair" allocations between members of their group and another group believed that both their peers and members of the other group would make biased allocations).
129. See discussion infra Part II.B.
130. The reciprocity norm has been observed in a wide range of cultural settings, although its precise content is probably socially contingent. See, e.g., Alvin W. Gouldner, The Norm of Reciprocity: A Preliminary Statement, 25 AM. SOC. REV. 161, 171 (1960).
131. See generally ROBERT B. CIALDINI, INFLUENCE: SCIENCE AND PRACTICE 21-22 (3d ed. 1993).
132. See id. at 23-25 (describing practices of Hare Krishna Society).
133. See id. at 29.
134. See id. at 26-28 (describing the "not-so-free" sample).
135. Cf. Goodpaster, supra note 3, at 348.
136. Cf. RAIFFA, supra note 1, at 48 (advising that midpoint between two opening offers is most likely deal point if it falls within bargaining zone).
137. Guthrie and I found experimentally that, holding both the facts and a defendant's final settlement offer constant, a defendant who makes an extreme opening offer is more likely to have his final offer accepted than one who makes a more moderate opening offer. See Russell Korobkin & Chris Guthrie, Opening Offers and Out-of-Court Settlement: A Little Moderation May Not Go a Long Way, 10 OHIO ST. J. DISP. RESOL. 1 (1994). One hypothesis for this outcome is that when the defendant makes a larger concession to get from his initial offer to his final offer, the plaintiff feels an obligation to reciprocate by making a significant concession from whatever his initial demand might have been.
138. See, e.g., Goodpaster, supra note 3, at 347 (describing this tactic).
139. Cf. Gouldner, supra note 109, at 171-72 (discussing disagreement among sociologists about precise requirements for compliance with reciprocity norm).
140. See, e.g., White & Neale, supra note 80, at 313-14 (finding impasse occurred more often when one negotiator had to make larger concessions than other to reach deal points within bargaining zone than when symmetric concessions were necessary, and concluding that "simply ignoring the reciprocity norm may be grounds for impasse").
141. See, e.g., RAIFFA, supra note 1, at 48 (Boulware strategy "more often than not . .. antagonizes the other party"); Goodpaster, supra note 3, at 355 (noting that "this tactic will likely create resistance and anger").
142. See, e.g.. Dean G. Pruitt, Methods for Resolving Differences of Interest: A Theoretical Analysis, 28 J. SOC. ISSUES 133, 142-47 (1972).
143. See Diekmann et al., supra note 107, at 1062 (noting that "equality serves as a highly available allocation heuristic - one that generally can be used without deliberation, readily understood, and suggested with little fear of seeming self-interested or unjust").
144. See, e.g., id. See generally David M. Messick, Equality as a Decision Heuristic, in PSYCHOLOGICAL PERSPECTIVES ON JUSTICE: THEORY AND APPLICATIONS 11 (Barbara A. Mellers & Jonathan Baron eds., 1993).
145. Notice that the "splitting the difference" rule can be viewed as a specific application of the reciprocity norm, as each party agrees to make a concession in exchange for an equal concession by the other.
146. Cf. BAZERMAN & NEALE, supra note 12, at 121 (explaining why a car salesman's offer to "split the difference" sounds fair).
147. Cf. Goodpaster, supra note 3, at 355 (noting that whether splitting the difference is "fair" depends on where the parties begin).
148. See J. KEITH MURNIGHAN, BARGAINING GAMES 39 (1992).
149. See id. at 36.
150. See id. at 38-39.
151. FISHER ET AL., supra note 28, at 81-94.
152. Cf. POSNER, supra note 78, at 62 (describing bilateral monopoly situation).
153. Kahneman et al., supra note 88, at 729-31; see also Thaler, supra note 83, at 205.
154. See Kahneman et al., supra note 88, at 730.
155. See Thaler, supra note 83, at 206-07 (finding subjects were willing to pay far more for bottle of their favorite brand of beer delivered from a "fancy resort" than same beer delivered from "small, run-down grocery store"). Thaler concludes that "buyers' perceptions of a seller's costs will strongly influence their judgments about what price is fair." Id. at 206.
156. Elizabeth Hoffman & Matthew L. Spitzer, Entitlements, Rights, and Fairness: An Experimental Examination of Subjects' Concepts of Distributive Justice, 14 J. LEGAL STUD. 259, 277 (1985).
157. See, e.g., Schwinger, supra note 96, at 98; see also WALSTER ET AL., supra note 81; Pruitt, supra note 121; cf. Hoffman & Spitzer, supra note 135, at 264 (describing this argument as theory of "Lockean desert").
158. See, e.g., Lamm & Kayser, supra note 97, at 75-76.
159. Cf. id. at 65.
160. See, e.g., LEIGH STEINBERG, WINNING WITH INTEGRITY: GETTING WHAT YOU'RE WORTH WITHOUT SELLING YOUR SOUL 133-38 (1998).
161. See, e.g., CIALDINI, supra note 110, at 136-70; BAZERMAN & NEALE, supra note 12, at 122 (reporting that waitresses in experiment earned better tips when they smiled at customers).
162. See David Sally, Conversation and Cooperation in Social Dilemmas, 7 RATIONALITY & SOC'Y 58, 78 (1995) (conducting meta-analysis of studies conducted over 35 years).
163. See George F. Loewenstein et al., Social Utility and Decision Making in Interpersonal Contexts, 57 J. PERS. & Soc. PSYCHOL. 426,432-33 & tbl.3 (1989).
164. See id.
165. Id. at 438.