Biases in Negotiations

Question 1

Framing

Answer 1

*Individuals perceive a problem differently based on how the problem is posed to them.

For example:
Decision-makers treat the prospect of gains differently than the prospect of losses.

*Positively framed negotiators are found to be more cooperative, more likely to settle, and to achieve greater joint benefits than negatively framed negotiators.

Question 2

Fixed Pie

Answer 2

*Individuals tend to assume that the other party places the same importance on the to-be-negotiated issues when the potential for mutually beneficial trades exists.

For example:
one child who wants to eat the orange meat fights with another child who wants to use the peel to bake cookies for the whole orange.

*Negotiators with fixed-pie perspectives often fail to ask for
the other party’s preferences and are reluctant to share their own preferences.

Question 3

Self-serving bias

Answer 3

*Individuals tend to perceive a situation in a way that favours their own positions.

For example:
People recall information that favours their own positions, leading to different conclusions about what a fair settlement would be.

*Self-serving negotiators tend to reject the other party’s offers because they are perceived as unfair.

Question 4

Anchoring

Answer 4

*First offer matters!
*Individuals tend to estimate values based upon an initial value and typically make insufficient adjustments from that anchor when establishing a final value.

For example:
People think a real estate has a significantly higher value if they have seen a higher price tag.

*Anchoring can affect a negotiator’s initial position, expected settlement (aspiration), and reservation price.
*First offers were found to significantly affect final settlement.

Question 5

Overconfidence bias

Answer 5

*Individuals tend to overconfident of the infallibility of their judgment when answering moderately to extremely difficult questions.

For example:
Most people think that their ability is above-average.

*Overconfident negotiators tend to be unwilling to make concession, increasing the probability of impasse.

Question 6

Emotionality bias

Answer 6

*A good mood tend to increase the reliance on heuristics and results in more biased judgments.

For example:
People who are happy have a higher opinion of themselves and perceive a higher probability of success.

*Positive mood contribute to negotiator overconfidence and overly positive self-evaluation.