Choices, Values, and Frames

Many different disciplines deal with the resolution of conflict. Even within the single discipline of psychology, conflict can be approached from different perspectives. For example, there is an emotional aspect to interpersonal conflict, and a comprehensive psychological treatment of conflict should address the role of resentment, anger, and revenge. In addition, conflict resolution and negotiation are processes that generally extend over time, and no treatment that ignores their dynamics can be complete. In this chapter we do not attempt to develop, or even sketch, a comprehensive psychological analysis of conflict resolution. Instead, we explore some implications for conflict resolution of a particular cognitive analysis of individual decision making. We focus on three relevant phenomena: optimistic overconfidence, the certainty effect, and loss aversion. Optimistic overconfidence refers to the common tendency of people to overestimate their ability to predict and control future outcomes; the certainty effect refers to the common tendency to overweight outcomes that are certain relative to outcomes that are merely probable; and loss aversion refers to the asymmetry in the evaluation of positive and negative outcomes, in which losses loom larger than the corresponding gains. We shall illustrate these phenomena, which were observed in studies of individual judgment and choice, and discuss how these biases could hinder successful negotiation. The present discussion complements the treatment offered by Neale and Bazerman (1991).