published by the Program on Negotiation at Harvard Law School(www.pon.harvard.edu)
In negotiation, we unwittingly operate under a number of systematic and predictable cognitive biases on a regular basis. Many of these errors in thinking result from our tendency to put too much trust in our intuition. In their book, "Judgment in Managerial Decision Making" (Wiley, 2008), professors Max H. Bazerman of Harvard Business School and Don A. Moore of Carnegie Mellon University present five of the most common mistakes they have identified and suggest a number of ways to keep this faulty thinking from ruining your most important talks.
Mistake No. 1: Viewing negotiation as a fixed pie.
Negotiators often falsely assume that their interests are directly opposed to those of their counterparts. The prevalence of competition in our society, ranging from sports to university admissions to corporate promotion systems, can lead us to view many other situations as win-lose. For example, too many negotiators assume that the pie of resources is fixed in size when, in fact, opportunities exist to expand the pie by creating value.
What's more, researchers have found that the belief in a fixed pie causes negotiators to devalue any concession their "adversary" makes.
Solution: Share information. The simplest way to break through the fixed-pie mindset in a negotiation is to disclose information to your counterpart. In particular, try to provide information that could lead to wise trade-offs. If a customer complains about your prices, break down your costs for her and ask whether she is willing to make concessions on delivery time or other issues in return for lower prices. Typically, the discoveries you reach jointly will outweigh the risk that the other side will take advantage of the information you disclose.
Mistake No. 2: Anchoring on the first offer.
Do not be overly affected by the first number that enters the negotiation. A high anchor creates expectations that cannot be supported.
Solution: Reject anchors. Unprepared negotiators are far more likely to fall into traps, such as inappropriate anchors, than their prepared counterparts. When you come to the table unprepared, you put yourself at a distinct disadvantage. Set concrete goals for the negotiation in advance so you won't be swayed by others' influence tactics and vivid stories.
In addition, keep in mind that your thinking will tend to be more intuitive and less rational when you're pressed to make snap decisions. Don't allow other negotiators to force you to give an answer right away. Instead, schedule breaks between negotiating sessions that give you time to think and evaluate.
Mistake No. 3: Escalating commitment.
According to Bazerman and Moore, negotiators have a tendency toward irrational escalation of commitment -- a strong psychological need to justify their prior decisions and behaviors, both to themselves and to others. After you've invested a great deal of time and energy in a course of action, it's difficult to know when to quit.
Many of us would rather remain committed to a losing strategy than admit we're throwing good money after bad.
Solution: Don't dwell on the past. Thoughts about the "sunk costs" you've invested can keep you plodding forward long after you should quit a negotiation or settle for a disappointing deal. Yet economists tell us that past investments should rarely affect our decisions about the future. At each decision point during your talks, make sure you have a sound basis for escalating your commitment to a deal.
Mistake No. 4: Feeling too confident.
Overestimating the chances that your counterpart will meet your demands is a common and potentially devastating negotiation error. Job seekers, for example, are often overconfident about what the other side will offer them to join an organization. Negotiators who fail to reach agreement after overestimating their value may find they've squandered rare opportunities.
Solution: Consider the opposite. Before you negotiate, reflect on the possibility that your expectations are incorrect -- and actively seek out information that might prove you wrong. During this evaluation process, a trusted outside party, whether an expert within your organization, a consultant, or some other adviser, could be your best resource. Outsiders are likely to offer a more objective view of the negotiation than you could ever manage.
Next, be willing to listen openly to difficult feedback and follow through on it. By accepting your own uncertainty about the future and the other side's interests, you put yourself in a position to make proposals that satisfy everyone.
Mistake No. 5: Focusing too narrowly on the issues.
The ability to focus closely on a person or task can be invaluable in many areas of life, including test taking, artistic pursuits, and relationships. Yet in negotiation, an overly narrow focus on the issues at stake can be a detriment, according to Bazerman and Moore. In particular, negotiators err by focusing too closely on short-term concerns, on their own desires, and on obvious issues at the expense of new ones.
Bazerman tells the story of two firms that pushed forward a joint venture to market a new product without addressing a number of ambiguities. To date, the companies have spent more than $350 million arguing over which side owns which share of the market. Greater focus on long-term implementation could have staved off this battle.
Solution: Ask questions and make multiple offers. By asking the other party lots of questions about his positions and interests, you'll gain a more realistic sense of your chances of getting what you want, now and in the future. In addition, put forth several different offers that you value equally. The other side's reactions to the various proposals will help you identify trade-offs and reformulate packages that show your flexibility and commitment to making a deal.