Concession Patterns in Dyadic Negotiations: Empirically Contrasting Sunk Cost, Loss Aversion, and Rationality Predictions

To understand the far-reaching effects of offers on negotiation outcomes, researchers have predominantly focused on first offers, while largely neglecting the subsequent negotiation process with its offer exchanges and concession patterns. We argue that this first-offer supremacy leaves a crucial element of the negotiation process largely unobserved. To address this gap, the present registered report examines key questions regarding the intrapersonal effects of concession patterns and the impact of one’s prior concessions on subsequent behavior. Drawing on different literatures, we developed three competing hypotheses: (1) the loss-aversion hypothesis (larger prior concessions leading to smaller future concessions and to less integrative behavior), versus (2) the sunk-cost hypothesis (larger prior concessions leading to larger future concessions and to more integrative behavior), versus (3) the rationality hypothesis (prior concessions leaving future behavior unaffected). Pilot study data in a distributive setting (N = 166) show promising effects for our paradigm and research question, corroborating that prior concessions indeed impact negotiators’ subsequent behavior. Building on these data, we outlined two additional preregistered experiments to replicate and extend our pilot findings by examining the underlying psychological mechanisms and generalizing from a distributive negotiation (Study 1) to a multi-issue integrative setting (Study 2). Preregistered analyses show evidence for different processes: In the distributive Study 1, larger concessions made later negotiation behavior more assertive (loss-aversion hypothesis). In the integrative Study 2, however, negotiation behavior was unaffected by prior concessions (rationality hypothesis). Finally, exploratory analyses in both studies reveal empirical support for the sunk-cost hypothesis in the predominant subset of negotiators who decided to continue their concessionary behavior. We discuss and integrate these findings.