This article first appeared in Negotiation newsletter, published by the Program on Negotiation at Harvard Law School (www.pon.harvard.edu)
So far, talks have been productive. After much discussion and careful analysis, you think you understand the issues on the table and the other side's priorities.
Taking some quiet time to prepare a proposal, you quickly find you're stumped. Should you give your counterpart a single offer, two choices, 12 or 20? If you aim too high, will you scare her away? How can you increase the odds that she'll feel, as you do, that an excellent agreement is within reach?
Researchers in fields such as psychology, law, and marketing have accumulated significant evidence that our judgment and decisions are strongly affected by the amount of information we receive and the way in which it's framed. This evidence implies that negotiators can use a number of influence strategies to reach their goals.
Strategy No. 1: Don't overwhelm them.
Studies of consumer behavior confirm that most of us would prefer fewer choices in our lives. In a 2000 study, professors Sheena Iyengar of Columbia University and Mark Lepper of Stanford University set up a tasting booth of high-quality jams in a gourmet food store. On one weekend, shoppers could taste six different jams. On another weekend, shoppers were offered 24 jams. The larger selection of jams attracted more people to the tasting table, though the number of jams people tasted was about the same on both weekends.
Here's the surprising result: 30 percent of shoppers exposed to six types of jam bought a jar, but only 3 percent of those exposed to 24 types did so. Consumers can become so overwhelmed by the array of available options that deciding not to make any decision at all can be a relief, the researchers concluded. This lesson applies to negotiation. Your counterpart may say she wants as many choices as possible so she can make an informed decision. But if you hand her 10 or 20 proposals, she's likely to feel overwhelmed and irritated -- real stumbling blocks to reaching agreement.
Strategy No. 2: Make several offers.
What's the right number of options to put forward? Northwestern professors Victoria Husted Medvec and Adam D. Galinsky argue that issuing three equivalent offers simultaneously can be a good strategy. They describe a software company that began initiating negotiations by presenting three equivalent software packages to its clients at once: for example, a $1 million package with payment in 30 days, the same software for $1.5 million with payment in 120 days, or an enhanced package for $1.35 million with a 30-day payment. Customers responded well to this strategy, and the company's profits rose.
When you present multiple equivalent simultaneous offers, or MESOs, you show other parties the issues you value most. In turn, their reactions to your offers tell you about their priorities. Together, you can craft an agreement that accounts for everyone's most important interests. What's more, MESOs give negotiators the choice they desire without sending them into decision paralysis.
Strategy No. 3: Be willing to be rejected.
In negotiation, rejection can sometimes be the most effective way to get to "yes." In a pivotal 1992 article in the Journal of Marketing Research Itamar Simonson of Stanford's Graduate School of Business and the late Amos Tversky wrote about upscale retailer Williams-Sonoma which was selling a bread-making machine priced at $275. Eventually, the company also began selling a similar but larger bread-making machine for $429. Williams-Sonoma sold few units of the more expensive machine, but after it was on the market, sales of the less-expensive machine almost doubled. Translated to the context of negotiation, the contrast effect suggests a strategic move: Ask for more than you realistically expect, accept rejection, and then shade your offer downward. Your counterpart is likely to find a reasonable offer even more appealing after rejecting an offer that's out of the question.
Strategy No. 4: Leverage the status quo.
We tend to accept the status quo rather than making a change. Employees in the United States, for example, make very different choices about 401(k) enrollment depending on whether they must opt in to or out of the program. In one company, 401(k) enrollment jumped from 49 percent to 86 percent after the company switched from an opt-in program to automatic enrollment, Brigitte Madrian of the University of Pennsylvania and Dennis F. Shea of UnitedHealth Group found. The framing of the choice dramatically affected consumer decisions (or lack of decisions).
Negotiators might gain an advantage by controlling the deal draft and its wording. After making an offer, you may be able to establish it as the default agreement by saying, "Let me know if you disagree."
Strategy No. 5: Use social proof.
When we look for social proof regarding the "right" way to behave, we tend to make quicker, more efficient decisions. Popularity makes just about anything seem more appealing. In their book "Negotiation Genius" (Bantam, 2007), Harvard Business School professors Deepak Malhotra and Max H. Bazerman suggest ways that negotiators in different arenas might use the power of social proof to improve their outcomes.
If you're selling a house, for instance, limiting the open house to just one hour might result in potential buyers (hopefully) filling the house and creating a buzz. During initial meetings with clients, be sure to provide testimonials from satisfied clients.
The five strategies we've discussed can have a powerful impact on your counterpart. It's important that you use them wisely.
Negotiators can find it tempting to try to portray a one-sided deal as a win-win agreement. However, if you suspect that the other party will be dissatisfied with your agreement in the long run, the use of influence strategies could tarnish your reputation and destroy the relationship.
If you're hoping to promote decisions that you truly believe will benefit everyone involved, don't hesitate to frame your arguments and proposals in ways that improve their appeal. There may be times in negotiation when you feel you have an ethical responsibility to guide people toward making wise decisions on their own behalf.