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Preferences in Negotiations

The Attachment Effect

  • Book
  • © 2007

Overview

Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 595)

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Table of contents (6 chapters)

Keywords

About this book

Negotiations are ubiquitous in business, politics, and private life. In many cases their outcome is of great importance. Yet, negotiators frequently act irrationally and fail to reach mutually beneficial agreements. Cognitive biases like overconfidence, egocentrism, and the mythical fixed pie illusion oftentimes foreclose profitable results. A further cognitive bias is the attachment effect: Parties are influenced by their subjective expectations formed on account of the exchange of offers, they form reference points, and loss aversion potentially leads to a change of preferences when expectations change.

This book presents a motivation, formalization, and substantiation of the attachment effect. Thereby, preferences and behavior are approached from a microeconomic and a psychological perspective. Two experiments show clear evidence for a systematic bias. The results can be used for prescriptive advice to negotiators: either for debiasing or to systematically affect the counterparty.

Authors and Affiliations

  • Karlsruhe Institute of Technology, Universität Karlsruhe (TH) Institute of Information Systems and Management, Karlsruhe, Germany

    Henner Gimpel

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