A proposal is worth less when it comes from one’s opponent.
Prospect theory
People assign value based on gains and losses, relative to some frame, rather than final outcomes; so the same (expected utility) scenario is reacted to differently (Kahneman and Tversky 1979).
risk-averse: choosing between (a) 100% chance of gaining $1000 and (b) 50% at $2500, people prefer A, though B has a higher expected gain of $1250.
risk-seeking: choosing between (a) 100% loss of $1000 and (b) 50% loss of $2500 over, people prefer B, though A has a lower expected loss of $1000.
People do not follow expected value and tend to be risk-averse in gain, and risk-seeking in loss. This is relevant to international conflict, as well as negotiation.
