Whether you like it or not, emotions are part of the negotiation equation. Anger, insecurity, confidence, camaraderie… all these and more have an impact on the process and outcome of negotiations.
More than most of us would care to admit.
Emotions color how we think about the task at hand, who we are engaged with, and, therefore, our behaviors. Not only that, but emotional satisfaction or ‘getting a good deal’ are part of the non-tangible outcomes many folks are interested in when wrapping up a negotiation.
Luckily, we humans are incredibly predictable, even in our emotional moments. By the end of this article, you’ll understand where emotions can throw you off your negotiation game, and what to do about these things to minimize their impact on your next deal.
Behavioral decision research lets us know more precisely how these non-rational components impact our attempts at rational negotiations. Generally speaking, our emotional outlook colors our rational outlook via biases and cognitive distortions.
Fixed Value or Fixed Pie Bias
Some negotiations do have fixed value: commodity sales, for one. So much money for so much product. Done.
Other, more complex negotiations don’t have a fixed value. Often, the way you negotiate can either create or minimize value.
If you can recognize (and minimize) your instinct for reactive devaluation.
In essence, if someone you view as an adversary offers something to you, you’re likely to minimize the value of that offer. Simply because they’re an adversary! You might have thoughts like “if they’re happy, we must have lost” or “whatever’s good for them is bad for us.”
Minimize this bias by entering your negotiation with the goal of creating value. You might not be able to, but if you intentionally shift your mindset towards value creation, you’ll avoid the pitfalls of dismissing something out of hand and minimizing the value available to you. Learn more about exactly how to increase value here.
Vividness Bias
Complexity can be difficult to compress into easy-to-evaluate metrics. How trustworthy is someone? Why does a physical space feel warm and welcoming?
Meanwhile, there are other components most all of us understand. Salary. Location. Paid time off. Airline miles.
It is these easy to define and understand components that make you susceptible to the vividness bias. Because these things are easiest to quantify, they stand out most in your mind. As put by Deepak Malhotra and Max H Bazerman in Negotiation Genius, it boils down to the fact that Items that are easiest to communicate quickly and easiest for others to evaluate are therefore attributed to more ‘vividness.’ (They also note that men tend to fall prey to this bais more frequently than do women).
You can avoid this bias by getting clear on your priorities, even so far as to create a scoring system for them. Maybe on your list of ‘nice to haves’ for a new job, salary is consideration 4, while healthcare benefits, PTO, and freedom to travel are your top three priorities.
Another trick to minimize the vividness bias is to separate the information from the influence. In a negotiation setting, it’s common for one side to offer ‘new’ information in a way designed to persuade. Ask yourself whether or not you’ve actually learned new information, or if the information is simply being presented in a way designed to influence your decisions and behavior.
Non-rational Escalation of Commitment
This is also known as the ‘sunk cost fallacy.’ You’ve already committed to a course of action and poured time, money, and/or energy into your plan. So now, you’ve got to stay the course, gosh darn it!
Not only that, but once you’ve voiced your goal, plan, or opinion, you feel you must stick to your guns. As humans, we prefer to interact with people who are consistent, and this need for consistency can be a setup for disaster as situations escalate.
Add to these two components a healthy competitive spirit, and you’ve got a recipe for disaster.
Some common real-world negotiations that showcase this non-rational escalation: custody battles, labor strikes, divorce, lawsuits, bidding wars… It’s not uncommon for folks to sink tens of thousands of dollars into an issue that could have ended at $500.
Avoid this pitfall by having a pre-planned exit strategy, should you need it. If you have an easy exit that lets you save face, you’ll be less liable to fall into the trap of excessive escalation.
You can also have an advisor to help you. This person should be someone you trust (obviously), who has not invested any time, energy, money, or expertise into the negotiation plan. They should, of course, also be free of conflict of interest regarding the outcomes of the negotiation. Check-in with your advisor for a reality check as to whether or not it’s fully rational and logical to escalate your negotiation.
Framing Bias
Framing is everything! People want most dearly to avoid losses. Even if a possible outcome is similar (or even the same) folks become far more rigid in terms of concessions and behaviors regarding loss avoidance. If, however, an outcome is framed as a possible gain, folks can get as bendable as Gumby.
In the real world, this translates into tactics designed to achieve the desired outcome. If your counterpart is looking for concessions from you, they might dangle a potential gain just out of reach.
Pay attention, before you even get started, to reference points that might be useful to you over the course of your negotiation. Having objective points of reference helps you keep your head on straight. Some examples include the status quo for your industry, your aspirations for negotiation outcomes, expectations, outcomes you’d like to avoid…
As you go, evaluate your strategy by asking yourself: “would this make sense if I used a different reference point?”
Sometimes, real-world negotiations call for a touch of risk. If you think your negotiation fits the bill, ask yourself if the risk would still be worth it if you changed the frame.
TL;DR: emotions have a nasty way of slanting your thoughts, and therefore actions, in a way that not only minimizes potential available value, but that could cost you the big bucks. Not to mention precious time and energy. Mind your emotions and biases to ensure you’re able to create value for both you and your counterparts!