BARRIERS TO CONSTRUCTIVE CONFLICT: TESTING PROSPECT THEORY & THE ROLE OF LANGUAGE FRAMING IN SOCIAL CONFLICT

Abstract

Prospect theory (Tversky & Kahneman, 1979) predicts that decision-makers work to avoid loss and maximize gains, even when outcomes are expected to be equal. Aversion to loss, and the feelings associated with loss, operates as a strong, often unconscious, bias that guides cognitive understanding of choice and consequently decisions. Prospect theory explains that faming choices around losses biases decision-makers to be more risk-seeking in order to avoid the feelings associated with loss. “The aggravation that one experiences in losing… appears to be greater than the pleasure associated with gaining the same amount” (Kahneman & Tversky, 1979, p. 279). Therefore, prospect theory explains how language framing can affect decision-making under uncertainty. Relatedly, social conflict is resolved by making choices (Diederich, 2003) and often involves a negotiation process that is affected by how negotiators perceive their situation (Schweitzer, et al., 2005). Yet prospect theory is widely underutilized in the context of social conflict (see Barberis, 2013; Butler, 2007). Therefore, this dissertation (1) tests the impact of loss and gain frames on decision-making within a social conflict involving a landlord, (2) examines the boundaries of the theory, and (3) offers insight about the implications of social conflict framing and language on decision-making. Results show that decision-making in a social conflict is significantly influenced by language framing. Loss frames and individual fault frames are two barriers to better conflict. Specifically, loss frames resulted in more negative affect for participants and less collaboration with the landlord. Gain frames resulted in more cooperation by participants. However, these effects were moderated by fault frames, indicating that, within a conflict, the feelings associated with being at fault may be more important than the feelings loss and gain frames evoke. The one exception where language framing may not be as effective is when participants had a prior experience of a similar conflict. For example, being a landlord, and being comfortable with conflict interacted with the language frames and, in some cases, prior experience was a stronger predictor of emotions and decision outcomes. Finally, emotions were found to be highly relevant to language framing and decision-making. Although all frames had some effect on emotion, negative emotion was much more affected by individual loss. Positive emotion was most strongly affected by joint and neutral fault conditions. These findings suggest that negative emotions are easily manipulated by imagining what we might lose individually, whereas positive emotions are more affected by believing we are not alone in the conflict. In support of prospect theory, framing a conflict around loss can make others feel worse about the conflict and about decisions. However, it is more difficult to make others feel positively about a conflict simply by reframing the conflict in terms of gains. Instead, in a social conflict, language frames around joint fault was the best predictor of positive affect. The implications of these findings are discussed. Keywords: Prospect theory, cognitive bias, negotiation, functional conflict