It is said that if computers were to negotiate, they would do a far more efficient job than we do as humans. Not only do computers lack the emotion that affects human decision making (and I would never suggest that emotion doesn’t play an important role in negotiation!) but they are not subject to the imperfections of human data processing.
Those imperfections are technically known as cognitive biases. These cognitive biases lead us to make systematic errors when we process information. These biases are necessary in a complex world with so many basic decisions needing to be made all the time. Left or right hand? Friend or foe? Run or hide?
The difficulty we have is that these biases are so ingrained that it is difficult to avoid them even where you know you want to be more careful in your decision making. In one study, even though subjects were told about the biases, they are unable to counteract the impacts of them.
There are approximately 175 recognised cognitive biases. Here’s a couple that have the biggest impact in your negotiations.
Reactive devaluation - This is where the very fact that a proposal comes from our negotiating counter-party leads us to devalue the proposal without full consideration. This impact is exacerbated where the proposal comes from someone we don’t like or trust.
Information availability – we are more influenced by information that is presented in vivid, colourful or attention-getting ways and will believe information that is presented clearly more readily than information that is confusing or overly detailed.
Commitment escalation – once we have commenced a negotiation, we are likely to continue down the negotiation path, even where new information comes to hand that changes the likelihood of a positive outcome.
To see an example of how a cognitive bias can derail your negotiation, consider my client Kieran who, due to commitment escalation, wasted months chasing a contract that was unlikely to ever proceed.
Kieran headed a national sales team. His team had been in negotiations with a government department for a large contract for over 12 months. When we analysed the parties’ interests and alternatives it became clear that the changes of getting to a successful outcome were low. In fact, Kieran stood a much better chance of getting a deal signed by focusing on other clients. He told me that he'd had doubts about the deal for some time but was reluctant to let it go as he'd promised at his job interview that he'd bring in this new client.
So, while we don’t want to lose our humanity and become computer negotiators, try to keep in mind the biases which may impact you and, where the stakes are high, seek an outside opinion to challenge your own perspectives.
For more information about how to negotiate effectively, or for assistance with your next negotiation, contact us for a no obligation discussion.