A Pain Shared is a Pain Halved, but a Joy Shared is not a Joy Doubled: Mental Accounting in Resource-Allocation Negotiations over Benefits and Burdens

Abstract: In a series of four experiments (N = 876), we systematically investigate negotiators’ perceptions, behaviors, and outcomes in allocation negotiations (i.e., distribution and contribution negotiations) over beneficial and burdensome resources. Based on the social dilemma and mental accounting literature, we predict that negotiators process gains and losses associated with their exclusive versus shared ownership in different mental accounts (i.e., exclusive vs. shared mental accounts). We propose that negotiators do not consider the potential outcomes in the exclusive and shared mental accounts in a balanced way. Instead, they turn their attention toward the exclusive mental account as a focal point and reveal psychological allocation preferences throughout the allocation process. Specifically, parties will prefer to privatize beneficial resources in their exclusive ownerships. Conversely, parties will prefer to collectivize burdensome resources into shared ownership. This behavioral tendency will be prioritized over the maximization of negotiators’ economic outcomes. Four experiments validated our predictions and highlighted the significant role of mental accounting in resource-allocation negotiations.

Keywords: resource allocation, mental accounting, allocation preference, benefits, burdens