Negotiating to Win

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Resisting and Using Cognitive Biases to Get a Better Deal

if you know your enemies and know yourself, you will not be imperiled in a

hundred battles; if you do not know your enemies but do know yourself, you will

win one and lose one; if you do not know your enemies nor yourself, you will be

imperiled in every single battle

sun tzu 孫子 6th century bc general, the art of war

© Victoria Pynchon ‘07

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a theory of the mind

the three cognitive biases that interfere with our ability to negotiate the best deal

three really good ways to combat those biases

and two ways to consistently get the better deal


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theory of mind

v.


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our ability to reason arose from our need to understand one another’s intentions and motivations, allowing us to coordinate within a group

but we never learned to read one another’s minds; suspicion followed

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we developed certain

tendencies of thought called

cognitive biases

universal ways of thinking about what motivates other people


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CB 1: reactive devaluation

CB 2: confirmation bias

CB 3: clustering illusion


cognitive biases that interfere with our ability to negotiate a good settlement

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How they work; why they’re harmful & how we can avoid their ill effects


2 ways to consistently gain the upper hand by

anchoring and framing


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what do we most want to know?© Victoria Pynchon ‘07

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What are they Thinking?• What’s their bottom line?

• Are they withholding evidence that undermines their case and supports ours

• What do they really need• How do they value their

case– Their chances of

winning– The amount of their

damages 12

only seven percent of negotiators sought information that would have revealed opponent’s true goals when it would have been dramatically helpful to do so.


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What type of information would

drastically help?• Their future plans• Their motivations• Their fears• Their desires• The basis for their

offer/demand

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Failure to ask diagnostic questions

is particularly troublesome in light of the fact that YOUR belief about THEIR

bottom line will have more influence on the outcome of the

negotiation than any other factor


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Let’s return to the cognitive biases that might keep us from asking these questions

reactive devaluation

the tendency to discount as unworkable, unworthy,

wrong or even sinister any suggestion from the

opponent, just because the opponent is the source of

the idea


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reactive devaluation prevents us from learning another’s mind

what do they want/needwhat do they have of value

how do they value ithow do they value what we have

why do they want what they are seeking


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solutions for reactive devaluation

ask diagnostic questions

Interestsneed $100K to design new

trademarkPriorities

trademark design less important than renegotiation of royalty agreement

confirmation bias


tendency to search for and interpret information in a way that confirms our preconceptions

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confirmation biasprevents us from knowing our own minds/risks


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confirmation bias solutions

neutral third partystory telling


clustering illusion

we tend to see patterns where none exist

• We tend to see patterns where none exist


clustering illusion problems

inhibits ability to “read the mind” of our enemyprevents us from accurately assessing

• perils • opportunities



clustering illusionsolution:

strategic joint sessions

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How do we influence others and prevent ourselves from being irrationally influenced?

two cognitive biases we can immediately use to . . .

© Victoria Pynchon ‘07© Victoria Pynchon ‘07

. . . influence & avoid being influenced

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anchoring

we tend to be influenced by any number

that enters the negotiation

environment28


the negotiator who makes the first

reasonable offer will set the

bargaining range for the entire negotiation

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create own false anchor move toward that number


resist anchoring

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framinginfluence or

be influenced


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framing


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a means of influencing another’s

perception by narrowing the

ways in which an item or an idea

can be characterized

what if you had to measure the size of something by using two frames?

what if you could only use one?


framing experiments

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• how tall was the basketball player –79 inches

• how short was the basketball player? –69 inches© Victoria Pynchon ‘07

use framing in negotiations

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language that emphasizes position

buyer uses words of diminishment

seller uses words of increase

reframe losses as gains & gains as losses

don’t frame too early or you may lose opportunities


if you know your enemies and know yourself, you will not be imperiled in a hundred battles


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Negotiating to Win

Education

Transcript of Negotiating to Win