Expectation versus Reality: Social Comparison of Contract Terms Offered by Potential Partner

Prior studies suggest economically equivalent but differently framed contracts have a psychologically distinct impact on exchanges and partner relationships. One significant difference is the divergent expectations of partner motivations they set, which can be confirmed or violated in the exchange. Yet, these studies do not consider that the partner likely has multiple simultaneous exchanges, allowing the focal firm to make comparisons of contract terms, which may also meet or violate partner expectations. Drawing upon social comparison theory and expectancy violation theory, we examine how expectations set by prevention and promotion contract frames are confirmed or violated by this comparison. Further, we predict these confirmations and violations lead to distinct focal firm managers’ emotions, as well as systematic impacts on focal firm investment in the exchange, and trust towards the new partner.