Cognitive Biases Flashcards
Irrational Escalation of Commitment
Negotiators often irrationally commit to a failing course of action due to “escalation of commitment,” seeking confirming evidence and desiring consistency to save face. An adviser as a reality checkpoint and learning from past regret can help prevent this irrational escalation.
Mythical Fixed-Pie Beliefs
Many negotiators believe that all negotiations are distributive and does not allow for the possibility of integrative settlements and mutually beneficial trade-offs
Anchoring and Adjustment
Anchors in negotiation, such as an initial offer, can mislead negotiators by setting a potentially faulty benchmark that influences subsequent judgments and decisions. Thorough preparation and using a devil’s advocate or reality check can help prevent errors related to anchoring and adjustment.
Issue Framing and Risk
Frames in negotiation influence risk perception, with people tending to be more risk-averse when negotiating potential gains and more risk-seeking when negotiating to avoid losses, as described by prospect theory. To mitigate the effects of framing, negotiators should be aware of their biases, ensure thorough analysis, and seek reality checks, although this can be challenging due to the deep-seated nature of frames.
Availability of Information
Negotiators can be biased by the availability of information, which is influenced by how easily it can be recalled and used, often through vivid or attention-getting presentations. This bias can lead negotiators to favor easily accessible information over accurate but less clear information and to rely on familiar search patterns, potentially overvaluing the information obtained from them.
The Winner’s Curse
The winner’s curse occurs when negotiators settle quickly on an item and later feel discomfort, suspecting they could have negotiated a better deal or that the item has hidden flaws. Preventing this requires thorough preparation to determine appropriate settlement values and securing performance guarantees to ensure the quality of the negotiated outcome.
Overconfidence
Overconfidence leads negotiators to overestimate their correctness, causing them to support incorrect positions and discount others’ judgments, which hinders successful negotiations. While overconfidence can reduce compromise and agreement, optimism can still result in more profitable settlements, suggesting a need for further research on the balance between optimism, overconfidence, and negotiation outcomes.
The Law of Small Numbers
In negotiation, the law of small numbers refers to the tendency to draw conclusions from limited experiences, leading negotiators to wrongly generalize that all negotiations will be similar to their past encounters. This often results in a self-fulfilling prophecy where negotiators expect and engage in distributive behavior, which the other party reciprocates, reinforcing the initial assumption.
Self-Serving Biases
People tend to attribute others’ behavior to internal factors and their own to external factors, a bias worsened by the actor-observer effect and documented to affect negotiation through self-serving biases. These biases, such as choosing favorable comparisons and overestimating support for one’s position, can lead to distorted judgments and harm negotiation efforts.
Endowment Effect
The endowment effect causes individuals to overvalue possessions they own compared to the value they place on the same item as potential buyers. In negotiation, this bias can hinder reaching mutually beneficial agreements by anchoring negotiations around inflated perceptions of value, especially when negotiating over existing possessions or accepted offers.
Ignoring Others’ Cognitions
Negotiators often overlook the importance of understanding the other party’s perspectives, leading to incomplete information and a tendency towards more distributive negotiation strategies. However, engaging in perspective-taking can reduce the risk of deadlock and improve the likelihood of finding mutually beneficial outcomes through integrative negotiation techniques like logrolling.
Reactive Devaluation
Reactive devaluation is the tendency to undervalue concessions made by disliked parties, which can hinder negotiation progress and escalate demands from the negotiator’s side. Strategies to mitigate this bias include maintaining objectivity, clarifying preferences early, and involving third-party mediation to manage concessions effectively.
