Mental Accounting in Negotiations with Externalities

• Applicant: Professor Dr. Roman Trötschel
• Subject Area: Social Psychology, Industrial and Organisational Psychology
• Term: since 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 371820038

Negotiations are defined as interactive decision-making contexts in which parties with conflicting interests jointly seek to reconcile their opposing positions in the context of negative interdependencies. In a first project, different operations of mental accounting in multi-topical negotiations with economic negotiation outcomes were investigated. However, many negotiations do not only result in internal economic outcomes for the parties at the negotiation table, but also cause external effects or ‘externalities’ (Coase, 1960) on third parties who have not consented to the negotiation agreements achieved between the negotiating parties. In the proposed research project, different operations of mental accounting in negotiations with quantifiable externalities will be investigated. The overarching goal of the research project is to investigate whether, how, and when external effects (i.e., externalities) are mentally registered, limited by mental budgets, efficiently balanced against internal effects, and ultimately evaluated as part of parties’ final negotiation agreements.

• DFG Programme: Research Grants