Self-enhancement biases and negotiator judgment: Effects of self-esteem and mood

Recent studies have documented a pervasive pattern of judgmental bias in negotiations. To explain such biases, previous research has focused primarily on how cognitive processes affect negotiation processes. In contrast, the present study investigated the impact of motivational and affective processes on negotiator judgment. Drawing on recent social psychological research on self-enhancement biases and positive illusions, we hypothesized that positive mood and the motivation to maintain high self-esteem contribute to negotiator overconfidence and overly positive self-evaluation. A laboratory experiment using a dyadic negotiation was conducted to test these hypotheses. The results of the experiment supported our major predictions that high self-esteem and positive mood affected negotiators′ confidence and optimism prior to negotiation, as well as their postnegotiation evaluations of performance. Implications of these results for understanding why negotiators often fail to reach optimal agreements are discussed.