#90 Common Mistakes Made in Negotiations
In this post we will explore the most common cognitive mistakes that people make in a negotiation. These biases prevent agreements of great value to both sides.
The most common issues that affect negotiator cognition are listed below:
The mythical fixed pie of negotiation
The framing of negotiator judgment
The non rational escalation of conflict
Overestimating your own value
Self-serving biases
Anchoring biases
The Mythical Fixed Pie of Negotiation
Agreements in negotiations are frequently blocked by the assumption that the parties' interests are diametrically opposed. The assumption of a fixed pie leads us to interpret most negotiations as win-lose. This leads us to "reactively devalue" any concession made simply because it is offered by an adversary. It also makes us susceptible to view the same settlement terms as advantageous when we propose them but disadvantageous when our counterpart proposes them.
The Framing of Negotiator Judgment
Framing plays an important role in the outcome of any negotiation. If both parties' view the negotiation from a negative frame (in terms of what it has to lose), then each side will be risk-seeking and therefore unwilling to accept a settlement. If both parties' view the negotiation from a positive frame it more likely that each side will make concessions and reach mutually beneficial outcomes. The frame will be determined by the selection of a perceptual anchor. Hence, negotiators should always create anchors that lead the opposition toward a positive frame. Emphasizing what the other side will gain will put them in a positive frame, thereby increasing opportunities for tradeoffs and compromise.
Escalation of Conflict
When each party is focused almost exclusively on beating the other side, they are primed to escalate their commitment to their initial course of action. You should avoid eliciting bold, firm statements from the opposite party, lest they feel trapped in a corner.
Overestimating Your Value in Negotiation
Overestimating the chances that the other side will give you what you want can be a devastating negotiation error. Negotiators who overestimate their value and consequently fail to reach agreement waste tremendous opportunities. In any negotiation, it is useful to know when to hold out for a better outcome and when to accept the deal on the table.
You are most likely to overestimate your value in a negotiation when your knowledge is limited. It follows from a cognitive rule - "When in doubt, be overconfident". One way to overcome this tendency is to seek objective value assessments from a neutral party.
Self-Serving Biases
Self-serving biases refer to the tendency for people to define what is fair in ways that favor themselves. Hence, each parties' "fairness" can lead to an impasse. The source of the bias is not from our desire to be unfair, but the difficulty we have interpreting information in an unbiased manner. Communication-building strategies, including asking questions, seeking tradeoffs, and making concessions, can help to reduce self-serving biases and can facilitate negotiated solutions.
Anchoring in Negotiation
First offers have the power to anchor the negotiation. However, unreasonable first offers can scare away the other side. If your opponent has a good sense of the bargaining zone or knows what the item is worth to him or her, your first offer will have little value. However, when your opponent lacks information, he or she may actually make inferences about the value of the item based on your first offer
This post is a summary of a chapter from the book - Judgment in managerial decision making by Max Bazerman and Don Moore