Negotiations with Incomplete Information under Time Pressure

Diploma Thesis from the year 2004 in the subject Psychology - Work, Business, Organisational and Economic Psychology, grade: 2,0, Free University of Berlin, 59 entries in the bibliography, language: English, abstract: This dissertation aims to give comprehensible insights into the interface between game theory and negotiation research. The ...

Diploma Thesis from the year 2004 in the subject Psychology - Work, Business, Organisational and Economic Psychology, grade: 2,0, Free University of Berlin, 59 entries in the bibliography, language: English, abstract: This dissertation aims to give comprehensible insights into the interface between game theory and negotiation research. The predictions of the mathematical models are summarized and compared with the experimental evidence, often generated by psychologists in the laboratory.
In the Theoretical Part negotiations under time pressure, firstly with complete and secondly with incomplete information are discussed. Research shows, that negotiators systematically violate the normative predictions of mathematical models. Negotiators tend to induce costly delays, leading to inefficient agreements and they do not calculate probability functions – as proposed by mathematic models.

In the Empirical Part, a yet untested negotiation setting with incomplete information under time pressure is examined. Contrary to earlier studies, the negotiators in this case were able to communicate freely. Under-graduates and post-graduates of a negotiation class at the London School of Economics participated in the study. The results show that despite the unrestricted communication process, game-theoretic predictions are valid: more information does lead to quicker and more efficient solutions.