A THEORY OF BUYER-SELLER NEGOTIATION AND ITS TEST IN THE PRIVATE HOME MARKET

Buyer-seller negotiation has been viewed as dyadic interaction within the buyer-seller exchange. Theories of exchange and theories as well as studies in negotiation, both in marketing and other social sciences, are reviewed to provide the foundation on which a theory of buyer-seller negotiation is developed.;For every one of these characteristics of the negotiation process and its outcomes, the theory (1) specifies and explains the relation it has with other negotiation characteristics variables, and (2) specifies and explains its relation to the power relation between the buyer and seller in the negotiation. This power relation (a theoretical construct) is defined as a two-dimensional construct: one dimension is power sources, and the second is "facets" of power sources. Facets of power sources specify the various elements of buyer and seller perceptions which need to be applied to the various power sources to achieve a full description of the power relation between the parties.;The theory then was successfully tested in the private home market. Data was collected on 45 different private home transactions in 1981. The data was collected from both parties in the negotiation and was analyzed using principal component analysis and regression analysis. The results show strong construct validity and predictive capability.;Based on the results of the private home market study, strategic implications for buyer, seller, buyer's and seller's agents, and public policy are drawn.;The theory presented in this thesis relates to the negotiation process and its outcomes. It characterizes the process by the initial difference between buyer and seller demands (initial conflict), and the length of the negotiation till an agreement is reached (or steps = number of offers and counteroffers). The theory also characterizes the outcome of the negotiation, by the distribution of the initial difference (net concession = the excess concession that one of the parties is willing to make over and beyond the other party's concessions, to reach agreement). Finally, the theory deals with the satisfaction of each party: (a) satisfaction with the deal (the agreed upon terms of exchange), and (b) satisfaction with the relation (between buyer and seller).