Social Distance and Negotiation

Valley, Keros

We employ a sensemaking lens to study economic transactions at the micro level, investigatinghow social distance affects the logic of exchange. In transcripts of 87 two-party negotiations, wefind that most pairs quickly coordinate on a shared logic of exchange and improvise in accordwith its implied rules throughout their interaction. Negotiators turn to three dynamic processes—trust-testing, process clarification, and emotional punctuation—when they have difficulty movingthe interaction toward a coherent, mutually agreed upon improvisation. The improvisations takethe form of openness, mutual gain, or haggling, and mediate the effects of social distance oneconomic outcomes.