106. The Narrow Focus in Negotiations: When Perceptions Matter More Than Value
Invited abstract in session TD-8: Human Factors and Strategic Tradeoffs in Emerging Technologies, stream Game Theory and Behavioral Management Science.
Thursday, 14:30-16:00Room: H8
Authors (first author is the speaker)
| 1. | Dylan Gellert
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| University of Cologne | |
| 2. | Nicolas Fugger
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| Universität zu Köln | |
| 3. | Andreas Fügener
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| Universität Köln | |
| 4. | Sebastian Schiffels
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| Wirtschaftswissenschaftliche Fakultät, Universität Augsburg |
Abstract
Modern supply chains thrive on collaboration, but determining each firm’s value contribution remains difficult—especially for customized inputs where market prices fall short. While economic theory (e.g., the Shapley value) offers guidance on fair value allocation, real-world negotiations often diverge. Our research explores how buyers and suppliers negotiate under such conditions, particularly when switching partners is costly.
We examine what parties focus on during procurement negotiations and what they might neglect. Do they account for the total value created by a deal, or narrowly focus on the supplier’s perceived contribution?
Using high-stakes field negotiations (Study 1) and a controlled experiment (Study 2), we show that parties often adopt a narrow focus, heavily influencing outcomes. Surprisingly, payoff-irrelevant cues—information that should have no rational impact—can shift perceptions and fairness judgments.
Study 1 reveals that suppliers frequently receive less than their Shapley value contribution, illustrating real-world consequences of this narrow framing. Study 2 confirms these effects in a lab setting and establishes a causal role for payoff-irrelevant cues. Even in asymmetric power dynamics, both buyers and suppliers can use these cues to their advantage.
We make two key contributions: (1) presenting robust evidence that payoff-irrelevant cues shape negotiation results, even in critical deals; and (2) demonstrating their causal impact through experimentation. For managers, this means that strategically designing such cues can guide negotiations—especially since parties often fail to consider the full value created. Recognizing this dynamic helps firms reach better outcomes in complex supply chain settings.
Keywords
- Supply Chain Management
Status: accepted
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