• January–February 2025
• Article

Most executives leave value on the negotiating table, for two main reasons: First, many executives mistakenly believe that they’re negotiating over a fixed pie and that gains for one side necessarily mean losses for the other. Second, they focus exclusively on how to claim value for themselves (by taking as much as they can of that mythical fixed pie) rather than coming up with ways to increase the size of the pie. All too often, negotiators fail to share information with their counterparts about preferences on the various issues, fearful that they will be exploited if the other side knows what they value. They keep all their cards hidden and assume that this is the secret to being a tough negotiator. To elicit the information necessary to create value, resolve conflicts, and reach efficient agreements, negotiators should use four key strategies: building trust, asking questions, sharing information, and making multiple offers simultaneously. A fifth strategy is also introduced: the concept of post-settlement set­tlements (PSS) to improve deals even after initial agreements have been made.

• January 2025
• Article

This research investigates the limited adoption of employee stock ownership plans (ESOPs) among small-to-medium sized businesses (SMBs) in the U.S. Through interviews with 30 SMB owners across various industries, we identify the key barriers to ESOP adoption as lack of time, money, and skills on the part of the owners. In doing so, the study suggests that a “shared ownership light” model, which involves sharing profits, information, and decision-making opportunities with employees, appears more feasible for SMBs than ESOPs. For SMBs that are interested in ESOP adoption, our research suggests that organizations providing employee ownership services could better assist SMBs by offering templatized models and best practices for profit-sharing plans, open-book management, and structured employee participation. The paper aims to broaden the discussion around shared ownership by considering a spectrum of options that have the potential to increase both value creation by and value-sharing among employees.

• 2024
• Working Paper

In real-world news environments, quantitative information is rarely presented in isolation; it is characterized through qualitative comparisons with various reference levels. Company earnings, for example, are commonly compared to analyst forecasts, previous earnings, and other benchmarks. We propose comparative noisy processing as a cognitive simplification strategy according to which people accurately incorporate qualitative comparisons to form category priors but integrate numerical signals imprecisely. In our framework, processing constraints induce excess sensitivity around category boundaries and insensitivity everywhere else. We study stock market reactions to about 200,000 earnings announcements, documenting that proxies for processing noise are associated with a more pronounced S shape around comparison points. The behavioral mechanism is corroborated by naturalistic experiments that exogenously manipulate processing constraints. We test two theories of what determines processing noise in the field. First, more common surprises might be processed with less noise as in models of efficient coding. We find that regions with more frequent surprises exhibit far higher return sensitivity and lower medium-term price corrections. Second, surprise may capture attention, leaving less capacity to process the numerical signal. We find that surprising qualitative realizations, e.g., a profit when a loss was expected, are associated with diminished sensitivity to quantitative information.