Post-trained LLMs are often optimized to produce helpful, polite, and accommodating responses. In adversarial negotiation, however, such behavior can become a vulnerability: emotionally framed language may influence an agent's bargaining decisions in ways that conflict with its user's objectives. We therefore introduce EmoDistill, an offline framework for distilling emotional negotiation skills from LLM-LLM interactions into smaller language-model agents. Here, an emotional negotiation skill is a state-conditioned behavior that determines which explicit emotion to invoke in a bargaining state and how to realize that emotion as an effective negotiation utterance. EmoDistill learns these two components separately: an Implicit Q-Learning (IQL) selector learns which emotion to express in each bargaining state, while a LoRA-adapted 7B policy learns emotion-conditioned expression through Supervised Fine-Tuning (SFT) and Judge Policy Optimization (JPO). Across four emotion-sensitive negotiation domains, the full EmoDistill policy achieves competitive utility and improves over vanilla and IQL-only baselines in most settings. Emotion-free ablations show that removing the explicit emotion channel substantially reduces overall negotiation utility, while transfer experiments reveal partial, domain-dependent transfer and robustness to unseen LLM counterparties.
Negotiation is a demanding social task for LLM agents, requiring strategic reasoning, persuasion, and interpersonal adaptation. Yet existing benchmarks often treat agents as emotionally neutral, overlooking a key driver of human bargaining behavior. We study how prompt-conditioned emotions affect LLM-based price negotiation. In a controlled framework, buyer and seller agents are independently assigned one of six emotional states and negotiate over 350 real consumer products under two budget conditions. Across 36 emotion-pair settings and five widely used LLMs, we find that emotions strongly shape outcomes. Angry buyers almost never reach agreement (0.39% deal rate), while happy buyers agree most often (28.91%), but obtain worse prices than fearful buyers. Emotion effects are role-dependent: buyer emotion mainly drives acceptance and rejection, whereas seller emotion shapes concession dynamics. These effects influence not only language, but also termination behavior and price trajectories, raising concerns for emotion-conditioned agents in commerce.
Skill-based LLM agents select reusable procedures from an external library to solve complex tasks, yet their routing decisions rely entirely on text-level signals such as task descriptions, verbal reflections, and experience-derived rules, while the model's own internal representational state remains unobserved. Recent interpretability work has shown that LLMs maintain linear emotion representations that causally influence behavior; however, these representations have been exploited only for post-hoc analysis or direct output steering, and have not been used to inform agent-level decision-making. We propose Emotion2Skill, a framework that extracts LLM-internal emotion vectors and incorporates them into both skill selection and skill evolution. At each decision step, a 27-dimensional emotion state is extracted from the residual stream and mapped to a confidence-gated summary injected into the routing prompt. Beyond online selection, emotion trajectories are analyzed for abrupt internal-state shifts to pinpoint problematic skill invocations, guiding targeted SOP rewriting that replaces the coarse binary outcome signal of prior methods. On WebShop and ALFWorld, Emotion2Skill with Qwen3-8B improves over the Zero-Shot baseline by +26.9% success rate and +25.5% average success respectively, outperforming all baselines on both benchmarks with consistent gains on Qwen3-14B. Co-activation analysis further reveals semantically coherent emotion--skill pairings, confirming that the routing improvements reflect meaningful internal-state signals rather than opaque statistical correlations. These results establish LLM-internal emotion representations as an effective decision-level signal for orchestrating agent skill systems, extending their utility beyond interpretability and output steering. The code is available at https://github.com/BoHan-LIN04/Emotion2Skill.
Emotion plays a pivotal role in shaping negotiation outcomes, influencing trust, cooperation, and long-term relationships. Developing negotiation dialog systems that can recognize and respond strategically to emotions is, therefore, essential to create more effective human-centered interactions. Beyond generating emotionally appropriate responses, interpretability - understanding how a system generates a particular emotion-aware response, is critical for fostering reliability and building rapport. Driven by these aspects, in this work, we introduce PRISMA, an interpretable emotionally intelligent negotiation dialogue system targeting two application domains, viz. job interviews and resource allocation. To enable interpretability, we propose an Emotion-aware Negotiation Strategy-informed Chain-of-Thought (ENS-CoT) reasoning mechanism, which mimics human negotiation by perceiving, understanding, using, and managing emotions. Leveraging ENS-CoT, we curate two new datasets: JobNego (for job interview negotiation) and ResNego (for resource allocation negotiation). We then leverage these datasets to develop PRISMA by augmenting self-training with Direct Preference Optimization (DPO), guiding agents toward more accurate, interpretable, and emotionally appropriate negotiation responses. Automatic and human evaluation on JobNego and ResNego datasets demonstrate that PRISMA substantially enhances interpretability and generates appropriate emotion-aware responses, while improving overall negotiation effectiveness.