The Strategic Consequences of Emotion in Bargaining

• In Event: Advances in Understanding Bargaining and Conflict

Abstract

The burgeoning psychological IR literature argues that emotions expressed in face-to-face negotiations can credibly reveal actors’ intentions. This literature is generally critical of rationalist approaches to reassurance through costly signaling, juxtaposing rational beliefs with the non-rational psychological and neurological processes by which personal face-to-face impressions are formed. However, these approaches are not mutually exclusive: actors’ behavior in anticipation of and in response to the information revealed by emotional signals may be quite rational. This paper presents a bargaining model with a “negotiating skill” parameter for each actor, which captures the amount of information they will reveal through personal interactions, and an initial move in which each actor decides whether to hold face-to-face negotiations. The model yields several interesting results. First, bad negotiators achieve bargaining outcomes that are collectively more efficient, because their emotional revelations reduce information problems that promote conflict. Second, the mere act of showing up (or not) for in-person negotiations reveals information about an actor’s resolve, since highly-resolved types are eager for their intentions to be revealed through face-to-face interaction, whereas bluffers seek to avoid it. These two results combine to yield a third: poor negotiators often face a "bluffing-efficiency tradeoff," wherein face-to-face diplomacy reduces the likelihood of conflict, but also weakens their bargaining position. This can result in rejection of in-person talks that could potentially make the difference between reaching a peaceful bargain and going to war. These mechanisms are illustrated with a case study of the bargaining process at Allied leadership summits during and after the Second World War.

Author

• Brandon Yoder, Australian National University