REVIEW ARTICLE
PORTELLA, Anderson Gonçalves [1]
PORTELLA, Anderson Goncalves. Negotiations via internet: Study of negotiator versus consumer behavior through the web. Revista Científica Multidisciplinar Núcleo do Conhecimento. Year 06, Ed. 01, Vol. 06, p. 74-95. January 2021. ISSN: 2448-0959, Access link: https://www.nucleodoconhecimento.com.br/production-engineering/negotiations-via-internet, DOI: 10.32749/nucleodoconhecimento.com.br/production-engineering/negotiations-via-internet
ABSTRACT
Through the studies carried out by the INTERNEG project (1996), research was initiated to evaluate and raise hypotheses regarding the influence of new computing technologies, where the small corner store started to negotiate via the web with another entrepreneur/consumer that previously would not be considered – the virtual trader. Then came the “faceless negotiator”, and the “remote or virtual consumer”, who geographically or culturally would be interacting in maximizing their utilities. The INTERNEG project had the INSPIRE tool as a working tool, which would allow, through a pre-questionnaire, an analysis of the messages exchanged between the negotiators, and a post-questionnaire (not mandatory), to evaluate the negotiations made between individuals who did not know each other. , as well as the outcome of their negotiations. The purpose of this article is to analyze internet trading – precursors of e-commerce, consumer trust relationships, efforts to make negotiations more interactive, and negotiator and consumer behavior. The method of analysis used is based on the structuralist view whose objective is to discover which structures support all the things that human beings do, think and perceive, being still a current of thought in the human sciences that was inspired by the linguistic model and which infers social reality from a considered elementary (or formal) set of relationships. The results showed that the bargaining scenario with few exchanges is undesirable to persuade the participants to accept post-agreement offers, however, it suggests that such offers must be accompanied by additional arguments that will make the bargain viable and allow the achievement of Pareto-optimal virtual trading.
Keywords: E-commerce, Virtual Trading, Game Theory, Behavioral Economics.
1. INTRODUCTION
The origin of game theory is related to the mathematician John von Neumann (1903-1975), together with the German economist Oskar Morgenstern (1902-1977). His first publication on games dates from 1944, “The Theory of Games and Economic Behavior”, and in it he demonstrates that the solution for zero-sum games (odd or even is an example, where when one player wins the other necessarily loses) can be determined using mathematical techniques.
These tools were developed and elaborated, starting in 1950, by Reinhard Selten, John Forbes Nash and John Harsanyi, who received the Nobel Prize in economics in 1994, for their basic analysis of equilibrium in non-cooperative game theory.
Nash’s contribution was not restricted to zero-sum games, but to a notion of equilibrium for game models, it became known as “Nash Equilibrium”, which represents a situation in which, in a game involving two or more players, , no player stands to gain by unilaterally changing his strategy.
A priori we must classify what a game would be: “situations that involve interactions between rational agents who behave strategically can be formally analyzed as a game”. (FIANI, 2004, p. 12)
In these cases, all the relationships that were studied in the cases monitored through the INTERNEG project (1996) and by the data collected by the E-bit company referring to interactions carried out via the internet, which we configure as a result of games where rational agents interact, strategically seeking to maximize their respective utility functions.
In this work, we consider the factors that led the agents to interact rationally, and other factors that were detected by the INTERNEG project and that could be considered irrational behaviors, and the latter cannot be analyzed by Game Theory because they do not meet the initial requirements on the best way to achieve the objectives (acting “without thinking”, the information necessary for rational conclusion of the transactions is not collected).
Even taking into account that players act rationally, rational calculation can be misleading, Binmore (1987), considered one of the most important game theorists, raised some conditions for the rationality of agents’ behavior:
1. O jogo (representando a interação dos agentes estrategicamente) é relativamente simples.
2. Os jogadores jogaram o jogo muitas vezes antes, e assim tiveram a possibilidade de aprender por meio de tentativa e erro (onde entra a questão do conhecimento profissional adquirido).
3. Os incentivos para jogar racionalmente, são adequados. (BINMORE, 1987)
1.1 OBJECTIVES
To analyze the intrinsic aspects of negotiations via the internet, which were precursors of the e-commerce phenomenon and the development of the negotiator.
Present the behavioral aspects that influence the consumer, the trust relationships that are built, the interaction efforts that support this structure.
From aspects identified in the experiment, to identify characteristics of the “homo economicus”, rational, thoughtful decision maker, centered on his personal interest and on the unlimited capacity to process information through the WEB.
Understand and model the decisions of agents more realistically, as suggested by Behavioral Economics, identifying how consumers make individual decisions based on psychological, emotional, conscious and unconscious influences that affect their choices in a negotiation process via the internet.
2. DEVELOPMENT
2.1 HOW ARE THE FUNDAMENTALS OF A GAME AIMED FOR TRADING?
A game involves the interdependence of the actions of its players, which leads them to consider in their decisions the reactions of other players, whom we will call “opponents”, in this way players make strategic decisions, in the sense that their decisions do not contemplate only their objectives, but also their possibilities of choice, and those of the other players (or opponents).
Obviously, there are also games that do not include strategic decisions, as they use only skill or even pure luck of the players involved, these will not be the object of study of this work, as they do not involve strategic decisions that evaluate the interaction between players in a transaction.
Strategic interactions in the light of game theory allow us to understand the determining factors of agents’ decisions and the logic behind each decision, compared to similar cases. However, game theory should not be used as an instrument to predict the behavior of agents indiscriminately, or as a rule for specific situations, as many factors can interfere in the concrete reality given the asymmetry of information, in comparison with what is predicted by the game theory, analyzed coeteris paribus.
2.2 TRADING THROUGH THE WWW: A STUDY BETWEEN DECISION POTENTIAL CULTURES – ARTICLE REVIEW
2.2.1 TRADING, TECHNOLOGY AND CULTURE
Negotiations involve communication, yet the studies focus more on the perception of negotiation processes and results in questionnaires and spreadsheets ignoring the vital rules of communication. The INSPIRE tool allowed free text communication, so that negotiations were collected and analyzed. A conclusion after the analysis was that culture influences negotiations through its effect on communications.
Cultural differences may not emerge in face-to-face interactions with negotiators from different cultures, and it is at this point that negotiations via INSPIRE allow cultural differences to be observed, and in what circumstances they arise in an anonymous negotiation.
In order to begin the studies of the interaction process, users were invited to register by choosing between one of the companies described: on the one hand there was the fictitious company Itex Manufacturing, which produced bicycle parts, on the other hand there was also the fictitious company Cypress Cycles , who builds bicycles (CRAY, 1997, Apud KERSTEN and NORONHA, 1997, p. 5).
In this situation they would face the following problem: Cypress Cycles needs a component for their new bike line and no known supplier could supply that need. Itex Manufacturing is looking to increase its component market share and has identified a prestigious opportunity to serve Cypress Cycles with the completion of a lucrative contract. In this contract there are 4 (four) matters to be discussed: price of components, delivery times, payment agreement and term of return of defective parts.
The negotiation process suggested by the literature is divided into an antecedent phase (negotiation analysis), current phase (negotiation management) and consequent phase, which comprises a post-agreement analysis, ending with the completion of a non-mandatory questionnaire.
Negotiation is not sequential, but parallel, and it ends when a compromise is reached or one of the parties ends the process and informs its opponent.
An agreement is considered “Pareto-optimal” or efficient if it cannot be improved. After analyzing the INSPIRE and determining the Pareto-optimal (agreement reached) the negotiation ends. The user is provided with the chance to choose one of the proposals or the possibility to build a new one, or end the negotiation and remain with an inefficient agreement that has been reached.
The INSPIRE tool’s primary goal is to observe and “log” (create records of all actions) user activities as completely as possible. Another relevant factor is that the supported negotiations are asynchronous, considering that the parties involved live in different time zones and rarely both are “logged in” simultaneously.
In this way, the INSPIRE tool would provide 2 (two) data sources, which describe the complete negotiation, better than the negotiated ones would describe it:
1st – 2 (two) questionnaires that are completed online by each trader;
2nd – a complete recording of the negotiation.
Both questionnaires attempt to capture information about negotiators that would otherwise be unavailable. They also directly elucidate perceptual and judgmental information about each other and about the trading environment.
2.2.2 STRUCTURING THE DATA
Seventy (70) measurements were made in each negotiation, to verify if they were being correctly analyzed through the tool already described. Each of these variables (factors) constitutes a column in the SPSS (IBM SPSS Statistical Package for the Social Sciences) output table. Each negotiation adds 2 (two) lines to the table, one for each negotiator (KERSTEN and NORONHA, 1997, p. 13).
The number of variables is intermediate in the sense that they are causally influenced by some independent variables. For example, the number of offers made by a negotiator is influenced by the bargaining norms of his culture, and influences the likelihood of reaching an agreement with a counterpart from another culture.
Independent variables are not affected by many of the other variables in the study. They fall into 3 (three) subcategories: subject, task and system variables.
- Subject variables are the ones that describe the negotiators and some of the most important variables for study;
- Task variables are related to issues committed to issues, these center around the business case;
- System variables represent the presence or absence of specific support characteristics in INSPIRE.
Dependent variables are those that have a direct measure of the final effectiveness of the decision’s potentiality. They can be divided into 3 (three) categories: measures of the excellence of the potentiality of the negotiation result, the negotiation process and the effectiveness of the system.
Subjective process variables include further judgment of satisfaction with the process.
Intermediate variables are part of a selected complex of measures that link the intermediate variables. It is the initial psychological baggage or absolute mastery that negotiators bring to the negotiating table.
A second class of intermediate variables is related to the behavior of negotiators during negotiation. A third class still involves the negotiator’s insights before the negotiation begins.
2.2.3 CULTURAL ANALYSIS OF PARTICIPANTS
The research participants, called negotiators, using the “INSPIRE” tool are: participants in university courses and seminars; web surfers, these mostly abandoned the negotiations which made them unusable.
The participant’s culture was defined in 4 (four) procedures:
1. país residente e idioma, se coincidir de outra forma;
2. país de nascimento e idioma se coincidir, de outra forma;
3. o país da primeira língua aprendida, se não inglês, português, espanhol, de outra maneira pelo país de residência;
4. país de nascimento. (KERSTEN e NORONHA, 1997, p. 16)
Data about the users of the “INSPIRE” system are collected through a “pre-negotiation” questionnaire. In the evaluation of the negotiators’ description, it was observed that young people, on average, consider themselves less experienced than their older peers, even though the correlation between age and negotiators’ experience is weak, not corroborating their perception.
Web access and usage is high, except among Indian traders, who experience difficulties with access and speed, but unanimously a significant increase in web access.
2.2.4 AGREEMENTS ACHIEVED
In total, 390 negotiators participated in 195 bilateral negotiations. In the evaluation of buyers and sellers of each of the companies in the example (buyers – Cypress, sellers – Itex), there is not an equal distribution, with each culture having more of one than the others. There are more sellers among the Finns than there are buyers, and the opposite occurred among the Indians and the Chinese. At the time of analyzing the data in IBM SPSS, it was not possible to distinguish between negotiators who ended a decidedly closed negotiation and a user who did not receive a return of messages that passed the deadline.
The research sought to determine the negotiations that end with a compromise from which it would be continued after the compromise was reached and forwarded to the “post liquidation” phase.
Analyzing the proportion of agreements and negotiations, it was found that the number of negotiators who reached an efficient agreement and who used the post-agreement feature in order to improve the agreements reached by them is relatively small.
2.2.5 OFFERS AND MESSAGES
Negotiations on “INSPIRE” were conducted through the exchange of offers and messages, which took place in two ways: they could be submitted together or separately. The negotiation ends with an agreement in which both parties accept the offer.
Indian negotiators are different from the others, as they sent few offers and messages, which may be due to their age and negotiation experience, but US negotiators had, on average, the same age and experience, not confirming this hypothesis.
Another interesting case observed by the author is the relatively small number of messages sent without tracking offers, and the large number of offers sent without messages.
2.2.6 EXPECTATIONS AND ACHIEVEMENTS
The agreement is just a result of negotiation, other results include satisfaction with the process, with the commitment and with yourself.
The system has a scoring method that considers that each trader defines their preferences on a scale of 0-100. If the interests and preferences are opposite, thus being reversed, then in the agreement the sum of the scores is 100. In any case, if the interests and preferences are coincident, the score can exceed 100 (one hundred). If, at the extreme of the situation, the interests and preferences are equal, they will be 200 (two hundred).
In the second hypothesis, users do not provide the expected and achieved scores, after entering the system they are asked to specify an offer which they believe to be the middle ground. The system calculates the score for this offer. It should be noted that the expected, the achieved and the score are not provided by the users, but calculated based on their individual utilities and offers.
Evaluating the data in the table below, it is concluded that Indians have the ability to achieve selected goals and that Americans are competitive despite achieving less than they expect, while scoring above what they expected to achieve.
Table 1 – Satisfaction of negotiators by origin
| Total | Canada | China | Finland | India | USA | |
| Valid casesa | 177-224 | 51-75 | 46-77 | 8-22 | 13-33 | 11-19 |
| Satisfaction with | 2.7-3.1 | 2.7-3.4 | 2.5-3.3 | 1.5-3.5 | 1.7-3.1 | 1.6-4.4 |
| the dealb | 2.9(1.4) | 3.1(1.3) | 2.8(1.3) | 2.5(1.2) | 2.4(1.3) | 3.0(2.0) |
| Satisfaction with | 2.7-3.1 | 2.5-3.3 | 2.6-3.3 | 1.9-3.6 | 2.3-3.8 | 2.1-4.3 |
| The performanceb | 3.0(1.3) | 2.9(1.4) | 3.0(1.3) | 2.8(1.1) | 3.1(1.4) | 3.2(1.6) |
| Expectations | 3.2-3.7 | 3.3-4.2 | 3.3-4.3 | 2.2-4.5 | 1.9-3.7 | 2.2-4.9 |
| foundc | 3.5(1.6) | 3.7(1.7) | 3.8(1.4) | 3.4(1.4) | 2.8(1.6) | 3.5(2.0) |
| Score achieved | 65(17) | 63(16) | 66(14) | 65(20) | 91(10) | 59(17) |
| Expected scored | 72(20) | 66(23) | 69(20) | 69(21) | 82(22) | 71(15) |
a the number of valid cases often depends on the variables in the table.
b 1-extremely satisfied, 7-extremely dissatisfied.
c 1-yes, completely, 5-no, not at all.
d between 0 and 100.
Source: INSPIRE Project (1996).
2.2.7 OPPONENTS
All communications between traders took place via INSPIRE not revealing identities, including email addresses, users used “nicknames” chosen before the start of trading. Although users can reveal their names through trading or other data, it was asked if this occurred during negotiations and only 17.6% said yes.
In the experiment, they were asked if they would guess the opponent’s country and 52% answered Canada, 14.5% USA and 8.5% the world. Users were also asked to rate their opponent’s attitude and characteristics and whether they were interested in seeing their opponents.
It was concluded that those that the perception does not vary significantly between countries, none of the extremes of each of the 5 (five) questioned characteristics were considered (they range from 1 to 5).
In terms of understanding opponents’ priorities, US negotiators have found it difficult to understand their opponents more than others.
Americans and Canadians are most interested in seeing their opponents and/or working with them in the future. Perhaps the reason for this is that they are more satisfied with their agreements and, with the exception of the Chinese, with their own performance.
2.2.8 AUTHORS’ CONCLUSIONS
The results obtained in this study are more oriented towards data exploration and the formulation of hypotheses and research direction, than the verification/confirmation of existing hypotheses.
Differences between cultures can be verified, which is related to the fact that negotiators do not know the identity of their opponent, some of the differences can be explained by the profession, experience and age of the negotiators.
The biggest impact of culture is caused by communication including negotiators’ expectations, reservation levels, concessions made during negotiation and satisfaction with the agreements and their own performances.
We consider the observations in this work to be preliminary and based on small, not well-controlled examples. In future experiments it will be necessary to collect data and compare the cultures of the 2 (two) negotiators. To accomplish this, a wider number of examples will be needed than we have so far.
An important finding of this work is the general and high acceptance of the INSPIRE tool and its features.
The system was created for training and research purposes. The high acceptance of the system led them to work on another system (INSS)[2], which would actually have greater capacity than the other.
Trading analysts have devoted much effort to specifying efficient deals.
They suggest that negotiators choose efficient compromises as soon as an opportunity is given. Behaviorists, on the other hand, suggest that the efficiency of an agreement is lower when compared to the variables of a process.
The results of this study also indicate that negotiators are always reluctant to improve on an agreement reached despite the fact that they are several times superior to what was previously negotiated. The reasons for accepting inefficient compromises should be studied in the future.
A significant amount of work must be done with existing numbers and categorical data. Much more work is needed in analyzing the messages. It is known through interaction with users and messages received that many of them consider trading extremely important.
There are cases when users feel cheated by opponents, becoming angry and emotional. This shows that the system has value as an effective trading tool and virtual trading should not take away all the frustration and anxiety that is associated with face-to-face trading.
This aspect is directly related to behavioral economics, as it reaches the limits of rationality of economic agents, overcoming purely economic aspects in decision making.
Rubin and Sander (1992) Apud Kersten and Noronha (1997, p. 25), suggest that while cultural differences exist, they often occur or succeed more than the reported differences affecting results, expectations and perceptions.
The INTERNEG project (1996) allowed unbiased communication between negotiators who do not know the identity or even the country of origin of their opponents to be monitored.
In one of the negotiations, “John” (pseudonym), born in Canada, sends a completion message, to his partner saying “Greg (pseudonym), it was a pleasure doing business with you, see you tomorrow”, John assumed that his partner is your office neighbor and a colleague. Instead, his partner was a Chinese student who was beginning his degree in education in Kingston, Ontario and had only recently arrived in Canada.
2.3 REASONABLE INEFFICIENT AGREEMENTS IN NEGOTIATIONS
2.3.1 EVIDENCE FOR INEFFICIENT AGREEMENTS
The acceptance of ineffective agreements and the reluctance to improve them are phenomena that have been observed in many experiments. Different interpretations are plausible and have been formulated on both theoretical as well as behavioral and experimental grounds. The latter includes widely published observations on cognitive biases and limitations, but also differences in people’s approach to understanding decisions and negotiation processes, which is an outcome of these processes.
Since 1996, bilateral analyzes and negotiations have been conducted and monitored between people from many cultures and with different educational levels and professional knowledge. The negotiators used INSPIRE, which is a web tool that allows anonymous negotiations with the use of conjoint analysis to build utility, an ease of communication for argumentation, and an advantage of visualization for the construction of a graph to represent the dynamics of the negotiation and the story.
Between December 1996 and March 1998, more than 1,000 (one thousand) people traded via INSPIRE; something around 59% reached an agreement and out of them only 46% reached an efficient agreement (Pareto-optimum). The INSPIRE suggests improvements for users who have reached an inefficient agreement by displaying five (5) efficient agreements and inviting users to continue negotiations. Aside from those who have reached an inefficient agreement and do not wish to improve it.
There are several reasons suggested why negotiators do not prefer Pareto improvements. These include fairness cases that have been discussed in economic experiments and possibly are averse or suspicious of a computer-generated result. This, in effect, may provide some explanation for rejecting inefficient agreements.
“Technically speaking, these considered aspects can be interpreted as hidden lies by the partners. So in the increased space of cases, your original settlement may, after all, have been Pareto optimal.” Korhonen (1998, Apud CRAY and KERSTEN, 1999) suggests that the rejection of a Pareto improvement can be included with the introduction of an expert or a third party that provides an appropriate incentive to guide the discussion in new directions.
This is because an expert or a third party changes both contexts in the dynamics of the process and in this way makes the results incomparable with a situation when neither is present. It is this attribute-dependent context that is critical, but neglects issues in decision potentiality.
2.3.2 CONTEXT DEPENDENT ATTRIBUTES
The expansion of the question space is a phenomenon that often occurs in negotiations when some attributes (questions) are context dependent. These are the attributes that describe the potential of the decision. They can be a seen criterion or a soft obligation that is related to the problem, process, or “the world outside the problem”.
Examples of these attributes are fairness, temporary pressure, social status, and empathy.
French (1986, p.344), declara que: a construção do modelo de decisão produzida como uma reflexão de me capacitar para explorar e (clarificar) esclarecer minhas preferências e opinião. De fato, em muitos casos ele guia sua evolução no que me anima a pensar sobre aspectos do problema, os quais até aqui eu não tinha considerado e, portanto, sobre os quais eu não tinha sentimentos pré-existentes (…) como eu articulo minhas preferências iniciais e opiniões durante a construção do modelo de potencialidades de decisão, minha atenção está atraída para alguma inconsistência entre essas e os canhões da racionalidade.
The difference between forming a single decision is that at the end the articulation of preference is revisited and attributes that at one point were not relevant may ultimately become critical.
The consideration of assigning dependent context before negotiations begin may make little sense for the decision-making process. This is explained because these attributes can become present only in certain situations that are difficult to predict and they need to be related to the negotiation problem, but for the personal and/or professional characteristics of the negotiator.
For example, a person may be “distrustful” of computers in general, but the fact that he agrees to trade using them implies his acceptance. Only when, and after a difficult negotiation, the system proposes another solution can suspicion resurface.
The decision to produce in general and in negotiation in particular is a problem-solving activity (ie choosing a decision), it is a process involving resources and efforts. Context-dependent attributes may depend on their attributes in the process and not solely on the problem attribute (alternatives).
For example, impartial attributes may depend on the initial overtures (offers) made by both partners, the frequency of “counteroffers”, and the concessions made by each side.
From the above examples, it follows that the context dependent attribute may reflect the decision maker’s psychological traits, opinion, and value system. It is not often that people change their traits and values, and here we are not concerned with such a significant case as learning and discovery. These traits are nonetheless present, but not necessarily noticeable. It is then concluded that they play a role when the situation calls for it, but they may not be visible in other situations.
2.3.3 RATIONALITY
Korhonen et al (1998) speculates that people through gaining work experience or obtaining high education are more likely to accept a Pareto improvement apparently because they have underlying reasons in their efforts for economic rationality.
Their axiom is that economic rationality is a principle that people should apply in decision making. The corollary is that by rejecting Pareto improvements, people violate the principle of rationality or vice versa. Rational negotiators must reject an agreement they have reached and accept an alternative that yields a higher utility value for at least one of them.
If they reject such an offer (suggested by a computer, mediator or third party) they cannot be rational. We argue that this is not necessarily the case and that the fact that two (2) concepts are loosely related, and that they are valid principles for the decision to produce others that are rationally economic.
According to Savage (1972), a rational decision maker/producer is one who “(…) has only one decision to make in his entire life. He must nominally decide how to live, and whether he can in principle decide once and for all.”
Decision scientists following and inclusive of SAVAGE have rightfully dismissed this huge world problem as unrealistic. Instead, they focus on episodes, locations, and partial decisions that they assume can be reasonably isolated from the decision maker’s schedule of activities during his lifetime.
The most comprehensive criterion of rationality is expressed in terms of big world problems, evaluating the rationality of each individual decision problem, which is not an easy task. In many situations it cannot be reduced to consideration of attributes of the decision problem and the preferences of the decision maker made in social settings when people interact and the outcome of these interactions has consequences behind this episode.
Negotiations are a typical example of similar decisions. It should come as no surprise that they can rarely be isolated from the decision maker’s past and his projections about the future.
In theory, someone in agreement with the principles of rationality means to say that he is consistent with the principles he has chosen and applied in life. This coherence is the essence of rationality (WELLMAN, 1995), as it connects the different and partial decisions between a life decision.
Coherence means that local decisions are contradictory to each other. In this way, employing the principle of rationality can be interpreted as using some global criterion on decision potentiality.
The rejection of Pareto improvement implies that the person rejects a solution for which some local criterion value is better than the accepted solution. Since it is the global criterion that determines whether a person is rational, the rejection of Pareto improvement has little impact on the rationality principle as a whole.
This can be argued as a rational decision maker must formulate all criteria, including global ones, that are relevant to the problem of conveying priority by choosing an alternative decision. This may well be possible in limited and well-defined problems, but it is only possible in cognitively difficult problems involving interactions between people.
2.3.4 AUTHOR’S CONCLUSIONS
The negotiation process contains a number of elements that could harm participants for either continuing or shortening the experience. In face-to-face bargaining there are numerous factors that can come amid the arguments, bluffs, offers and disagreements that are utilized in the process.
In an electronic bargain some of these characteristics are reduced if not eliminated in importance, especially those parts of the exchange that are personality based. Most would likely elevate the prominence of the offers and counter-offers that are exchanged and the arguments made to support them. The data collected by INSPIRE allows us to examine some of these factors to see if they distinguish between those that proceed to the post-agreement and those that do not.
As in the Nash equilibrium, which represents a situation in which a game involves two or more players, neither player stands to gain by unilaterally changing his strategy, needing to come to an agreement to obtain the best possible result for both.
One of the characteristics that can affect decisions to move to the post-agreement is the number of offers exchanged. Conceivably, a large number of offers may indicate that the process has moved incrementally towards the initial agreement, so that the participants could more likely continue.
On the contrary, a large number of offers may suggest that the bargain has been difficult and therefore that the participants would not want to prolong the experience even if the agreements were improved.
An inspection of the distribution showed that those who used the post-agreement mechanism had made more offers than those who did not. It would appear, then, that familiarity with both systems or a sign that the opponent is making more offers inclines the participant to persist in the effort to reach a better deal.
This result can also be interpreted in a different way. If the sheer number of offers indicated a harder path to initial agreement, then proceeding to post-deal may simply be an attempt to improve an agreement that, up to that point, has been less satisfactory despite having reached the agreement.
We can try to shed more light on this result by examining two other factors in the process.
Moving into the post-deal is a matter of the kinetics of maintaining a comfortable relationship, which I would expect this to be reflected in the opponent’s assessment. In the questionnaire administered at the end of the negotiation topics, they were asked how friendly their opponents had been. The cordiality, however, was not distinguished at all between those who moved to the post-agreement and those who did not. The perception of the opponent as an individual apparently did not influence the choice to proceed.
While opponent characteristics do not directly influence participants’ choices, it may be that communication between negotiators can. Then again by facilitating the exchange of information and then making the sequel more attractive.
The result shown in the table below provides a somewhat contradictory answer to this question.
Table 2 – Negotiation process versus the use of post-agreement
| Number of valid cases | level of importance | |
| Number of offers sent | 268 | .002 |
| cordiality | 169 | .939 |
| Number of messages sent | 268 | .351 |
| Average length of messages | 259 | .631 |
| Number of offers with messages | 268 | .001 |
| Average time between exchanges | 268 | .323 |
| Time remaining until deadline | 259 | .402 |
Source: INSPIRE Project (1996).
The sheer number of messages sent by an experienced individual does not distinguish between those who followed through and those who did not. The average size of messages also has no effect to show a significant difference. Whether one sends too many or too few messages and whether those messages are long or short makes no difference to the likelihood of them going to the post-agreement. The sheer volume of communications is not a factor. However, when we look at the number of offers that were accompanied by messages then the difference is significant at the 0.001 level.
These two results indicate that offers represent an important part of the post-deal movement. Simply communicating with the opponent first does not seem to have an effect on this aspect of the bargaining process.
Many of the messages exchanged without offers contain explanations, arguments or partial offers (formal offers can only be made including values for all 4 (four) topics). However, a number of these messages are also social in nature.
Interestingly, these messages appear to have no effect on the likelihood of proceeding to post-agreement. When combined with the lack of any effect on perceived friendliness of this change/loss, some doubts about the importance of the human side of the process to proceed to post-settlement although it may be the nature of electronic bargaining, or lack of face-to-face interactions mitigates these influences.
Two other factors were also examined for their possible influence on the post-settlement decision. Given the importance of offers, it appeared possible that the timing of interactions was also important to surround the participants for the post-agreement. If the exchanges were frequent, then the parties may be more willing to continue the process. The ratio of time between messages has no significant effect.
Finally, the influence of deadlines was examined. The INSPIRE system imposed deadlines, both for pedagogical reasons and to prevent a large number of trades from remaining open even though they had not recorded recent activity. We considered the possibility that the existence of deadlines could inhibit the use of post-agreement for both, because there was insufficient time or because it was perceived/observed as imposing closure in the process.
2.3.5 FUTURE DISCUSSION POINTS
At the beginning of the article we asked if “less is better than more”. This question reflects the use of INSPIRE utility values to assess the effectiveness of agreements. If utility plays no role for INSPIRE negotiators then this could be reason enough to reject the post-agreement. In any case, this is not the case, as 64.4% of the total user population and 63.8% of users who have reached inefficient agreements state that the utility is extremely or very useful (values of 1 or 2 on a scale of 7 points).
We have seen that 65.2% of users who did not enter the post-agreement phase and 59.6% of those who did not enter the post-agreement phase considered the utility extremely or very useful. Furthermore, there is no significant difference between those who entered the post-agreement and those who did not, regarding their considerations of importance of utility (p=0.441).
This implies that the use of utility, although considered very important in negotiations, does not influence the negotiators’ decision to improve the agreements, answering the question that many of them accept less before more.
While examination of the factors that could affect post-deal movement is limited, it suggests some of the dynamics that may underlie a deeper explanation of negotiators’ general reluctance to proceed to the post-deal phase. The emphatic scarcity of any cordiality effect in the use of the post-deal made it doubtful that the opponent’s characteristics can have much impact.
This result may need to be verified by examining face-to-face negotiations and other “desirability” traits, but this suggests that the importance of similar factors may be underestimated. Similar research may also help to shed some light on the question of how much influence an anonymous person inherent in electronic bargaining has over the process as a whole.
The importance of the offers and the accompanying messages places more emphasis on the real elements of the process as drivers of the post-agreement movement. It seems to be some moment, perhaps a mutual moment, that builds up more offers as they are exchanged. This timing is helped by the inclusion of supporting information and offer details. Along with the findings on cordiality these results point to the structure of the process in terms of more formal parts of interaction as at least one important factor in understanding why negotiators neither make nor employ post-agreement mechanisms.
What does this imply for experimenters who might wish to persuade their subjects to employ post-agreement techniques?
First of all, the results, like many others, indicate that simply offering a post-deal as a no-risk means that a means of improving an agreement is not enough. Less than 21% of eligible subjects take advantage of opportunities themselves. Furthermore, 39.4% of those who entered the post-agreement phase did not select an efficient agreement.
For experiments, the results imply that a simple bargaining scenario which may involve only a few exchanges of offers is undesirable to persuade participants to accept post-agreement offers.
The paper also suggests encouraging or requiring offers to be supported by arguments that should facilitate further bargaining after the initial agreement is reached. This can even be useful for more realistic exercises by extending beyond several sessions. This could increase the number of offers and provide momentum that seems to help at least some negotiators to embrace both the concepts and practices of post-deal bargaining towards Pareto-optimal trading.
3. FINAL CONSIDERATIONS
The practice of trading via the internet has several characteristics that enhance the conduct of business in general. The web allows unprecedented levels of two-way connectivity or reach, in contrast to traditional broadcasting which is one-way and traditionally a two-way communication medium is limited to a few participants.
Internet auction systems such as “E-bay” and “Primeiro Auction” (both 1997) can generate the best possible price, and similarly discussion groups and collaborative technologies form the “glue” that leads to the formation of virtual communities. This can certainly affect the balance of strength in a trading situation.
One consequence of the reach the Internet can have is the vast growth in contact between small businesses across national geographic and cultural boundaries.
Small-scale entrepreneurs seek contracts with geographically distant customers. If taken literally, business people (persons or institutions formally trained as negotiators) are required to deal with partners whose cultural background is unknown, unfamiliar.
All these factors lead to a qualitative change in the nature and common practice of negotiation and correspondingly imply the need to change training, the process tends to be much more culturally susceptible (sensitivity) and preferably technologically conscious, this factor is not new, and is now required on a large scale in routine business and not just for diplomats and the corporate elite.
A notable feature of the web is massive scale with respect to several dimensions: fast, high capacity, cheap, and transactions occur quickly and in large volumes.
Technology not only created the need, but also provided the ways/means to deliver effective solutions: the web is a vast resource, a forum for consultation with other experts and specialists, and a means to access negotiation support tools. The web is not a passive file of information, it can be used to transport “live” objects with specific behavior in a certain context.
A common misconception expressed by practitioners new to the web is that it misses all the important cues that body language provides in face-to-face negotiation, corroborating what the author of the article mentions.
It is important to remember that the web is not an “alternative” to a traditional form of interaction similar to face-to-face or a telephone conversation, but an addition. In fact, the lack of face-to-face negotiation is an advantage, as it avoids the concomitant stress of negotiation at this level (this is reflected in a hard sell).
It is also a precursor exercise in the relationship with IoT (Internet of Things), opening up a universe of possibility of transactions and interactions in order to support negotiations.
An important aspect of the negotiation terms that can establish a relationship between the buyer and the seller that leads to the continuity of the transaction is the fact that in e-commerce, significant complexity of the negotiation terms is introduced, the fact of the physical distance between partners, the fact that they both don’t know each other, plus the difference between business and cultural practices – all this adds to the high degree of complexity.
For last, but not least on e-commerce has increased the degree of complexity between buying and selling, but at the same time it offers no less opportunities between small and large buyers and sellers. Software can make transactions more efficient and overcome many of the traditional difficulties encountered in cultural and behavioral aspects identified in studies carried out by the INTERNEG project (1996).
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APPENDIX – FOOTNOTE
2. National Institute of Brazilian Social Security.
[1] Master in Economics and Business Management, Post-Graduate in Project Management, Post-Graduate in HR Management, Post-Graduate in Economic-Financial Administration, Bachelor in Economic Sciences, Graduating in Production Engineering.
Sent: September, 2020.
Approved: January, 2021.
