Information asymmetry in buyer - seller negotiations and its impact on effectiveness , efficiency and satisfaction Competitive Paper Main session

Owing to the increasing need to maximize scarce resources, it is crucial for organizations to perform their negotiations effectively and efficiently. Despite the importance of effectiveness and efficiency of negotiations, it is surprising that negotiation performance has to date been analyzed – both in the literature and in practice – mostly in terms of the effectiveness of the outcome. To date, the efficiency of negotiations has attracted less interest. This might be due to the dilemma that the exchange of information during the negotiation process – though being important for the effective outcome – is related to costs (input). Given this background, this paper seeks to analyze the overall performance of buyer-seller negotiations (effectiveness and efficiency) as well as their impact on negotiation satisfaction by manipulating the amount of information buyers and sellers receive before entering the negotiation. Specifically, we conducted a face-to-face negotiation simulation. The results show that the group provided with more information achieved more effective and efficient outcomes as well as higher levels of satisfaction with the negotiation. Therefore, our analysis implies that the open exchange of information should be an ideal in long-lasting buyer-seller negotiations; because this is generally not the case in practice to date, we provide further implications for its appropriate implementation and discuss opportunities and risks.