Can Negotiation Cause Harm? Examining the Externalities of the Negotiation Modes

Abstract: Negotiation is widely regarded as an effective tool for conflict resolution, fostering cooperation and integrative solutions. However, its impact on external stakeholders—those absent from the bargaining table—remains underexplored. This research investigates how interactive and nominal negotiation modes influence externalities, i.e., unintended consequences affecting third parties. Across five studies, with a sixth planned, we demonstrate that interactive negotiations enhance communication and coordination between negotiating parties, which can amplify both positive and negative externalities depending on the context. In contrast, nominal negotiations, by limiting direct interaction, appear to foster greater concern for external stakeholders. Our findings suggest that the cognitive and motivational resources dedicated to internal conflict resolution in interactive negotiations may detract from consideration of external consequences. This work challenges the assumption that negotiation always leads to optimal outcomes and offers practical insights into managing negotiation strategies to better address broader societal concerns.

Keywords: negotiation externalities, interactive versus nominal negotiation, positive and negative externalities, decision-making consequences