A to Z of Negotiation - K is for Kahneman
Firstly, I have to confess that thinking of a “K” for negotiation was harder than it might seem. Every text book on my overloaded bookshelf seemed to jump from J to L as if K didn’t even exist. However, a few of them made reference to Daniel Kahneman, best known for his book Thinking Fast and Slow. Kahneman is generally regarded as the world’s most influential living psychologist.
Most of Kahneman’s work focuses on the difference between System 1 and System 2 thinking. In System 1 thinking, there is instinctive response and decisions are made very quickly. System 2 is a more structured thinking process and takes time to rationally investigate the whole scenario. In his work, Kahneman identifies many of the cognitive biases that have been mentioned in previous posts, such as anchoring, availability, loss aversion, framing and the sunk cost fallacy.
Also of relevance in the negotiation context is Kahneman’s thinking around the difference between experience and memory. When we negotiate with someone, that person has two versions of our negotiation – the lived experience and the memory of that experience. This is of particular relevance to how we manage our reputation as a negotiator and how willing others may be to negotiate with us in the future.
Researchers have shown that in relation to any experience, the way the experience ends has a significant impact on our memory of that experience. For example, Kahneman talks about two colonoscopy patients. The first patient has a shorter procedure but the final part of the procedure is where the patient experiences the most pain. The second patient has a much longer procedure and experiences significantly more pain than the first patient, however there pain reaches its peak in the middle of the procedure. In the patients’ memories, the first patient reports a worse experience than the second, even though they had less overall pain.
While everyone experiences a negotiation, our memory may distort how we see that negotiation in the future. A tough negotiation that ends with some friendly, positive comments may get you better long-term results than a very friendly negotiation that turns hostile when agreement cannot be reached. Taking the time to ensure a negotiation finishes positively, even when it has been difficult, will be a worthwhile investment.
For more information about how to negotiate effectively, or for assistance with your next negotiation, contact us for a confidential, no-obligation discussion.