The Role of Cultural Orientation in Bargaining Under Incomplete Information: Differences in Causal Attributions

EXTENDED ABSTRACT - With the growing trend in the globalization of business activities, there has been a significant increase in the frequency of cross-cultural business interactions (Triandis, Kurowski, & Gelfand, 1994). As economies become more interconnected, it is critical to understand the influence of culture on all aspects of organizational behavior including bargaining and negotiations. The main purpose of this research is to examine the role of cultural orientation on bargaining outcomes. The general premise, following the recent literature in cultural psychology, is that many judgments and decisions are the result of cognitive processes that are culturally imposed (e.g., Chiu, Morris, Menon & Hong, 2000; Menon, Morris, Chiu & Hong, 1999). The rationale is that exposure to different ecological factors and social structures perpetuates different cultural values and ideals and thus certain judgment Abiases@ are likely to be more prevalent in one culture than another (Triandis, 1995).

Citation:

Ana Valenzuela, Joydeep Srivastava, and Seonsu Lee (2005) ,"The Role of Cultural Orientation in Bargaining Under Incomplete Information: Differences in Causal Attributions", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 220-221.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Pages 220-221

THE ROLE OF CULTURAL ORIENTATION IN BARGAINING UNDER INCOMPLETE INFORMATION: DIFFERENCES IN CAUSAL ATTRIBUTIONS

Ana Valenzuela, San Francisco State University, U.S.A.

Joydeep Srivastava, University of Maryland, U.S.A.

Seonsu Lee, Wonkwang University, Korea

EXTENDED ABSTRACT -

With the growing trend in the globalization of business activities, there has been a significant increase in the frequency of cross-cultural business interactions (Triandis, Kurowski, & Gelfand, 1994). As economies become more interconnected, it is critical to understand the influence of culture on all aspects of organizational behavior including bargaining and negotiations. The main purpose of this research is to examine the role of cultural orientation on bargaining outcomes. The general premise, following the recent literature in cultural psychology, is that many judgments and decisions are the result of cognitive processes that are culturally imposed (e.g., Chiu, Morris, Menon & Hong, 2000; Menon, Morris, Chiu & Hong, 1999). The rationale is that exposure to different ecological factors and social structures perpetuates different cultural values and ideals and thus certain judgment "biases" are likely to be more prevalent in one culture than another (Triandis, 1995).

Specifically, this research adds to the literature on bargaining and cross-cultural psychology by examining how cultural orientation affects bargaining behavior and outcomes in situations characterized by the absence of objective referents and standards against which to judge potential outcomes (White & Neale, 1994). The cultural psychology literature suggests that causal attributions are culturally dependent (e.g., Choi, Nisbett & Norenzayan, 1999) and thus systematic differences in bargaining outcomes across cultures may be due to differences in the causal attributions for opponents’ behavior (Shafir, Simonson, & Tversky, 1993). This research extends this line of inquiry to a bargaining context and attempts to link causal attributions to bargaining outcomes. We use ultimatum bargaining as the setting to study the role of cultural orientation (e.g., Buchan, Croson & Johnson., 2004). Two experiments demonstrate that subjects from Western cultures (e.g., United States) have a tendency to seek causal explanations for an opponent’s behavior in terms of individual personality traits. In contrast, subjects from Eastern cultures (e.g, Korea) are more likely to recognize that an opponent’s behavior may be dictated by other-oriented traits but only where the external constraints are made salient.

Consider a one-sided incomplete information ultimatum situation where the responder is uncertain but the proposer knows the total amount available for division. Uncertain about the total amount available for division and thus unable to assess the fairness of an offer, a primary concern of the responder is about the relative share or proportion of the total amount that a proposer’s offer represents (e.g., Camerer & Thaler, 1995; Croson. 1996). Given the uncertainty, there is also a natural inclination to develop a causal explanation for an opponent’s behavior (Blount, 1995) which then determines whether or not an offer is accepted. It is proposed that when situational constraints are not made salient or when there is no additional information about the proposer’s situation to discount personality attributions, bargainers in both cultures are likely to attribute the proposer’s offer to personality traits (Krull et al., 1999). However, making the situational constraints salient or accessible allows bargainers to draw upon their implicit theories that differ across cultures. In that case, bargainers in Korea are more likely to recognize the power of situational constraints as they draw upon the implicit theory that an individual’s behavior is shaped by situational factors and will, therefore, be more sensitive to situational constraints in their causal attributions of an opponent’s behavior (Choi & Nisbett, 1998).

Recent research in cultural psychology suggests that interdependent self-construals, characteristic of collectivistic societies, predict implicit trait beliefs to some extent (Church et al., 2003). This implies a belief in traits or trait-relevant behavior but in terms of traits associated with other-oriented or self-sacrificing values. Similarly, Menon et al. (1999) showed that implicit theories of groups or collectives vary between Western and East Asian cultures. In other words, cultural orientation may not only affect the importance given to personality characteristics compared to situational constraints in one’s inferences of others’ behavior, but may also affect the importance given to individuals compared to group dispositions.

Experiments 1 clearly demonstrate differences in behavioral outcomes across Korean and U. S. responders. Subjects were assigned the role of responders in a one-sided incomplete ultimatum game. Responders were told that the individual assigned the role of the proposer had to make decisions either independently or within a group context. Results show that while there are no differences in ultimatum bargaining outcomes across cultures in an individual context, cultural differences between bargainers in Korea and U. S. emerge in the group decision context. In Western cultures, the prevalent thinking is that individuals can shape group behavior and individuals are primarily responsible for their behavior even in a group context (e.g., Chiu et al., 2000). . In East Asian cultures, the thinking is that individual behavior is shaped by the group and that conformity to group norms or directives are responsible for an individual’s behavior in a group context (Menon et al. 1999). Therefore, in an incomplete information bargaining situation, Korean responders, when facing a relatively low offer, are more likely to discount the influence of the group on the individual=s decision relative to U. S. responders. As a consequence, acceptance rates are significantly higher for Korean than U.S. responders. Further, Experiment 2 shows that differences in causal reasoning mediate the influence of cultural orientation on bargaining outcomes when the decision of how much to offer is made in a group context.

Together, the results indicate that there are boundary conditions to the influence of culture on judgment and decision making. In other words, there are certain conditions under which cultural differences are manifested supporting the more recent, dynamic view of the influence of cultural orientation (Briley et al., 2000; Choi & Nisbett, 1998). In our context, penalization of apparent competitive (or unfair) intent seems to be a universal phenomenon as ultimatum bargainers from both U. S. and Korea exhibit the fundamental attribution error. However, when there is accessible information that can be used to discount the personality based attributions, cultural difference emerge. In particular, Korean bargainers are more likely to recognize and acknowledge alternative reasons for observed behavior, which tend to correct the initial tendency to seek causal explanations in terms of personality dispositions (e.g., Choi & Nisbett, 1998).

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