How Pervasive is the “Going Rate”? Some Behavioural Insights into the Process of Enterprise Bargaining

Abstract

This paper examines the significance of information about “going rates” in the resolution of issues by negotiation. In addition to the strategic factors which negotiators must consider this paper identifies a behavioural factor, the mutually prominent alternative, which also has the effect of drawing negotiators towards the going rate as a settlement for their own negotiations. The results of research based on an experimental negotiation confirm the importance of going rate information on negotiation outcomes. This finding, and its explanation in terms of the going rate adopting the characteristics of a mutually prominent alternative, has significance in the context of enterprise bargaining; it would suggest that outcomes negotiated at the enterprise level may not be as egocentric as some advocates of a deregulated labour market might suggest.

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