Mental Models May Lead Negotiators Astray: When Do People Avoid Negotiating?

When negotiating for services, do we consider the impact on the service-provider's emotions and performance? Do we approach negotiations differently when procuring services versus goods? Across three studies, we investigate differences between service and good negotiations. We assess employers' (buyers) predictions of employees' (sellers) reactions to negotiating and the ensuing economic value. We show that people expect service negotiation to be particularly detrimental to relationships, but not to performance. We further demonstrate that employers' are less willing to negotiate for services than for goods. Negotiators are more lenient – in both affective and economic terms – when negotiating for services. Our studies underscore the importance of negotiators’ expectations about both relational and economic outcomes in their decision to initiate – or avoid – negotiation. Our findings suggest that people are more cautious in initiating service negotiations, at least in part due to their mental model of the impact of negotiation.