the plea bargaining process rather than through trials.
Similarly, many more civil disputes are resolved by
private settlement than go to trial. Transactional
lawyers spend much of their time negotiating deals
and contracts. In practice, lawyers will negotiate with
opposing parties and their counsel, with insurers, with
regulators, and with their own clients. Psychologists
have studied negotiation in a variety of contexts,
including negotiation as it occurs in the legal system.
Research indicates that negotiation outcomes may be
influenced by such factors as cognitive heuristics and
biases, social perceptions, emotions, social influence,
and the legal background of the negotiators.
Basic negotiation theory holds that negotiation out-
comes are a function of the negotiator’s reservation
price, or bottom line. That is, negotiators will identify a
point at which they would prefer to walk away from the
negotiation without an agreement rather than accept
terms that fall below that point. Where negotiators set
this reservation price along a continuum of possible
agreements is affected by their expectations about the
outcomes that would likely result in the absence of a
negotiated agreement. So, for example, a civil plaintiff’s
reservation point (i.e., the lowest amount for which he or
she would settle) is informed by his or her prediction
about what would happen if the case was decided at
trial. Similarly, a party negotiating a sales agreement on
behalf of a buyer sets his or her reservation price (e.g.,
the highest price he or she would pay) in light of the
availability and value of a possible agreement with an
alternative contracting partner. Negotiators with more
attractive predicted alternatives are likely to have higher
reservation prices and to reach more favorable agree-
ments. Negotiators have also been shown to be influ-
enced by their aspirations, or goals, for the negotiation,
with negotiators who set higher goals achieving more
favorable agreements. At the same time, however, high
reservation prices and aspirations have both been shown
to lead to a higher likelihood of impasse (i.e., failure to
reach a negotiated agreement) and to a decreased level
of satisfaction with the same objective outcomes.
Within this general framework, however, it is clear
that negotiators are influenced by a number of addi-
tional factors. Going beyond expected value theory, in
which negotiation decisions are determined by a com-
parison of the expected value of forgoing a negotiated
agreement with the expected value of the proposed
agreement, psychological research demonstrates that
negotiation decision making is also affected by nego-
tiators’ construal of and judgments about the other
party or parties, the context, and themselves.Heuristics and BiasesLegal negotiators, like other negotiators, can be influ-
enced in their decision making by psychological
heuristics or biases. For instance, legal negotiators on
different sides of a dispute tend to make biased evalu-
ations of the merits of the case such that their evalua-
tions favor their side, overestimate their likelihood of
prevailing at trial, and are more likely to believe that
the fair outcome is one that favors their side. In part,
this is because those who are exposed to only the
information that is available to a particular side of a
dispute tend to be optimistically overconfident—that
is, to be more confident and less accurate in their pre-
dictions of the likelihood that they will prevail
than those who have information from both sides.
Similarly, when they seek out additional information,
negotiators exhibit the confirmatory bias as they seek
and evaluate data in ways that are consistent with their
already existing views. In addition, however, even
when they have access to the same objective facts,
negotiators often interpret those facts and make judg-
ments about them in ways that are consistent with
their own (or their clients’) interests—a manifestation
of the self-serving (or egocentric) bias.
Negotiators may also be influenced by anchors.
Anchoring and adjustment refer to a phenomenon by
which available values provide a starting point (or
“anchor”) for a judgment; adjustments are then made
away from the anchor, but these adjustments are often
insufficient. In the legal context, anchors have been
shown to influence settlement decision making in civil
cases by anchoring negotiators’ evaluation of the appro-
priate settlement amount. For example, the availability
in memory of sizable verdicts that are reported in the
media may anchor negotiators’ perceptions of a case’s
potential settlement value. In addition, the first offer
made in a settlement negotiation has been shown to
influence the final negotiated agreement—the higher the
opening offer, the higher the ultimate settlement.
Similarly, research has found that disputants are more
likely to agree to a particular final settlement amount
when that final offer is preceded by a more extreme
opening offer than they are when the offer is preceded by
an opening offer that is only slightly different from the
final offer. Because the initial offer anchors expectations
about the appropriate settlement amount, the value of
any concession is measured against those expectations.
In addition, experimental research has demonstrated
that negotiators can be influenced by contrast and com-
promise effects as they generate and consider options448 ———Legal NegotiationL-Cutler (Encyc)-45463.qxd 11/18/2007 12:43 PM Page 448