Hypergame—Theoretical Analysis of Seller-Buyer Negotiation Process

Abstract

The present study examined the effectiveness of a newly developed method based on hypergame theory to analyze the decision making process in negotiations. Twelve pairs of subjects played a seller-buyer negotiation game on the purchase of piano as an example. Subjects reported all transactions in the negotiation to experimenter by writing. The descriptions were later analyzed and categorized to construct a series of hypergames. Each hypergame represented a transient stage of the negotiation process. The method effectively revealed the subjects' perceived situations in the negotiation, including preference orders, strategies, and expected results. In the course of negotiations, typical actions such as proposals, concessions, threats, and strategic surprises were clearly identified in referring to the constructed hypergames. Discussed theoretical issues are: (1) The method can be applied to the naturalistic decision making studies to analyze the differences of perceptions and actions between experts and novices in the negotiation task, (2) Expansion of hypergame theoretical model should be made in order to generate hypergames of sequentially changing perceptions in the dynamic situation, and (3) Protocol analysis should be reconsidered to secure the validity of the constructed hypergames.