The Handbook of Conflict Resolution (3rd ed)
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Failure to Reach Agreement When Agreement Would Be Mutually Beneficial
Cognitive biases can lead negotiators to “leave value on the table.” The most drastic case is when negotiators opt for impasse when a mutually beneficial agreement could have been made. Cognitive biases can reduce negotiators’ abilities to reach a deal by restricting what we call interpersonal scope and issue scope. Interpersonal scope is the extent to which a negotiator considers the needs of the other party. Restrictions of interpersonal scope are fueled by egocentric biases, or the tendency to focus on one’s own perspective. In addition, because people have exclusive access to their own thoughts but others do not, they tend to overpredict how well the other party understands their arguments. Both of these tendencies lead to reductions in interpersonal scope: the extent to which a negotiator flexibly considers the issues involved to arrive at an optimal outcome. Anchoring and framing often restrict issue scope. For example, if one party anchors the negotiation with an extreme first offer, the other party might assume there is no zone of possible agreement and fail to pursue that issue for possible win-win solutions. Framing restricts issue scope when a particular frame causes an issue to be seen in only one way. For example, when concessions on an issue are framed as losses rather than gains, negotiators may dismiss them (Neale and Bazerman, 1985). Although we have distinguished interpersonal and issue scope, some biases are equally pernicious to both types. For example, decision fatigue will reduce a negotiator’s likelihood of considering the other party’s perspective (Lin, Keysar, and Epley, 2010) as well as being able to think flexibly about the issues on the table (Vohs et al., 2008).
Reaching Agreement Prematurely or in Substandard Way
Sometimes all of the people in an interdependent decision-making situation prefer one settlement to another but nevertheless fail to achieve it. This is known as a lose-lose outcome (Thompson and Hrebec, 1996). For example, in the end-of-year-2012 fiscal cliff negotiations, both Republicans and Democrats came to the table with a goal: Republicans wanted to cut government spending and Democrats wanted to raise taxes. Both Republicans and Democrats stood to lose by failing to reach agreement. However, after the midnight deadline passed on New Year’s Day, President Obama and Congress were at a deadlock. On January 2, an agreement was clumsily reached, and by many accounts, the agreement was not attractive for any group, in particular, Republicans (Calmes, 2012). Known as a lose-lose agreement, both parties settled for an outcome that is clearly worse for both as compared to other viable outcomes.
The frequency with which lose-lose agreements occur is both surprising and alarming. One statistical analysis involving more than five thousand participants revealed that lose-lose agreements occurred 20 percent of the time (Thompson and Hrebec, 1996). That is, in cases where the parties have compatible preferences with regard to a particular issue, fully one time in five they agree on an alternative that both prefer less than another outcome. Moreover, it is unlikely that the lose-lose agreement is an artifact of the laboratory, with no real-world significance. Balke, Hammond, and Meyer’s (1973) examination of labor-management negotiations at Dow Chemical is a case in point. Analysis of that dispute revealed that labor and management both preferred the same wage increase, yet neither party realized it until after a costly two-month strike.
Another example is illustrated in Walton and McKersie’s analysis (1965) of the Cuban missile crisis, which stemmed from the Soviet Union’s buildup of missile bases in Cuba during the Cold War. The crisis had reached dangerous proportions when the United States threatened to retaliate against the Soviet Union when Cuba fired on American airplanes. In fact, the Soviet Union, unbeknown to the United States, also preferred that Cuba refrain from provoking the United States because there was a danger that Cuba’s behavior would incite a war over issues not important to Soviet interests. The parties that had come to the brink of nuclear war shared compatible interests without realizing it.
Why does this happen? As discussed earlier, people sometimes adopt a fixed-pie perception in which they believe that the other person’s interests are completely opposed to their own. This belief is established at the outset, before people even have the opportunity to meet or talk with each other. In addition, the fixed-pie perception is remarkably durable; it remains even when people have attractive incentives and ample feedback is available to challenge the perception. But sometimes people do realize their preferences are compatible with the other party’s and yet still fail to capitalize on shared interests. Political pressures, situational norms, and organizational constraints prevent people from optimizing their compatible interests. A vacation rental company with a week-long rental policy gets a call late in the week from a renter requesting a midweek stay. It would be better for both parties to rent the property, but this means that company policy would be broken, so the agency refuses. Parties may face similar kinds of social pressure in other situations, and the desire to save face may prevent a person from settling on what is obviously a better deal (Rubin, Pruitt, and Kim, 1994).
Negotiation Relationships
Another consequence of cognitive biases is that they can damage relationships between negotiators. Negotiators must often try to predict the thoughts and motives of their counterparts with little information. Because the fixed-pie bias often causes negotiators to perceive their counterparts as competitors who intend to claim their resources, negotiators often attribute malevolent intentions to their counterparts, leading to more competitive behavior (Epley, Caruso, and Bazerman, 2006). Viewing a counterpart as a competitor makes it more likely that a negotiator will approach a negotiation with a focus more on economic and outcome issues at the expense of relational concerns (Curhan, Elfenbein, and Xu, 2006). In sum, cognitive biases lead negotiators to view counterparties as adversaries, which reduces concerns for relational outcomes and may damage negotiators’ relationships and reputations.
Self-Perception and Self-Confidence
Negotiators who are unable to reach their outcomes and maintain relationships may begin to suffer a loss of confidence and may begin to doubt their overall effectiveness in interpersonal relationships. Over time, negotiators who are ineffective may develop a prevention focus rather than a promotion focus. Negotiators who have a prevention focus try to avoid bad or undesirable outcomes; conversely, negotiators who have a promotion focus attempt to achieve desired goals. One investigation found that negotiators with a prevention focus achieve worse outcomes than do those with a promotion focus (Galinsky, Leonardelli, Okhuysen, and Mussweiler, 2005). Other research indicates that negotiators who have dealt with angry partners in the past are less (rather than more) likely to make demands in a subsequent negotiation (Van Kleef and de Dreu, 2010), suggesting that negotiators plummet further into self-doubt with negative experiences. The research suggests that failed bargaining experiences act as a self-fulfilling prophesy, such that negotiators who have reached impasses on a prior negotiation were more likely to have impasses in their next negotiation or reach deals of low joint value compared to those who had previously reached agreement (O’Connor, Arnold, and Burris, 2005).
REMEDYING BIAS IN NEGOTIATION
Much more thought goes into examining the nature of bias and error at the bargaining table than to solutions as to how to eliminate or reduce it. Perhaps this reflects the fundamental tension between basic and applied research. However, we are not content to naively suggest that mere awareness of bias is sufficient to deal with it. We discuss two types of remedies: naturally occurring social-contextual factors that may either enhance or exacerbate biases, including teams of negotiators, constituency and accountability pressure, communication media, and social relationships; and deliberate and structured interventions, such as might occur in a classroom or training session, including feedback, analogical reasoning, and formal training.
Naturally Occurring Remedies of Bias
The Team Effect.
Team effect refers to the empirical observation that as compared to one-o
n-one negotiations, teams are better able to forge mutually beneficial agreements in negotiations that contain potential for integrative agreement (Thompson, Peterson, and Brodt, 1996). Specifically, a comparison of three types of negotiation configurations (team versus team, team versus solo, and solo versus solo negotiations) revealed that the presence of at least one team at the bargaining table increased the overall joint value (Thompson, Peterson, and Brodt, 1996). Why are teams able to forge mutually beneficial agreements when solos often fail? Negotiators exchange more information when a team is at the bargaining table than when just two parties negotiate (O’Connor, 1997; Carnevale, 2008). Information exchange leads to greater judgment accuracy about parties’ interests, which paves the way toward integrative agreement.
Constituency and Accountability Pressure.
A number of studies have found that when negotiators are accountable to a constituency, they often bargain in a more assertive fashion. When the bargaining zone is small and the potential for integrative agreements does not exist, constituency pressure may lead to deadlock and impasse. However, other research has found that in cases where negotiators often too rapidly capitulate and make concessions, accountability to another party can lead to more beneficial outcomes. For example, in research on gender and negotiation, women often perform worse than men, holding other factors constant (Kray, Thompson, and Galinsky, 2001). However, when females are positioned to be accountable to another, they are more likely to forge better deals (Bowles, Babcock, and McGinn, 2005; Bowles, Babcock, and Lai, 2007; Amanatullah and Morris, 2010).
Relationships.
The relationship between negotiators may affect cognitive biases. For example, negotiators who are friends or have close network ties may be less likely to falsely presume conflict with the other party and may even be able to synchronize and communicate more fluently. It is likely that close negotiators come to the bargaining table with an eye toward their own outcomes and toward future negotiations and reputation. However, friendships may exacerbate decision biases such as anchoring and framing effects. If one negotiator anchors on a particular issue, the friendship may make it especially hard to adjust away from that offer for fear of damaging the relationship or a common network tie. Indeed, negotiators may engage in premature concession making, and such unmitigated communion might paradoxically reduce joint gains (Amanatullah, Morris, and Curhan, 2008).
Communication Medium.
Negotiation modalities can range from text or e-mail messages to face-to-face conversation. In an initial study of e-mail negotiation, negotiators who had only e-mail contact fared much worse than did those who had an opportunity to connect by phone (Moore, Kurtzberg, Thompson, and Morris, 1999). The most personal modality, face-to-face, helps to diffuse biases that result from impoverished communication; even a short telephone call can pave the way to integrative agreement (Morris, Nadler, Kurtzberg, and Thompson, 2002). However, because face-to-face negotiations tend to take more time and effort than less rich modalities (Purdy, Nye, and Balakrishnan, 2000), they may also exacerbate biases that result from decision fatigue. On the other end of the spectrum, negotiations by e-mail can be helpful when negotiations are simple and the issues can be clearly laid out or when it is possible that a negotiator may get overly emotional in person. However, the impoverished communication medium may exacerbate perceived conflicts by not providing sufficient context around communications.
Deliberate and Structured Interventions for Remedying Bias
Feedback.
Most people do not get timely or accurate feedback about their negotiation performance. Thus, they continue to make the same mistakes time and again. To return to the fixed-pie perception, most negotiators assume that the other party’s gain comes at their direct loss, and vice versa. Even if people receive feedback, it is often incomplete or misconstrued, whether by the sender or the recipient. This, of course, is consistent with the egocentric biases we discussed earlier.
As a way of combating bias, Thompson and DeHarpoort (1994) examined the effects of three types of feedback: process feedback, outcome feedback, and no feedback. Negotiators who received no feedback knew nothing about the other party or the underlying structure of the negotiation. They were given a blank sheet of paper and asked to write some comments about the nature of their experience in the negotiation they had just completed. Negotiators who received outcome feedback were told the value of the overall package to the other party in the completed negotiation. This feedback provided important information about the underlying structure of the negotiation. Finally, negotiators who received process feedback were given complete information about their opponent’s preferences for each issue negotiated.
As an example, for a company representative who negotiated an employment contract, process feedback imparted information about how the employee subjectively valued the various issues discussed (salary, vacation, annual raise, and so on). Negotiators who received process feedback were most likely to abandon the pervasive fixed-pie assumption in subsequent negotiations and to recognize trade-offs that were mutually beneficial for both parties. Suppose two negotiators have just received process feedback after negotiating a job contract. Assume these same parties are to negotiate again about a completely different set of issues, say, regarding a house rental. Having received process feedback, they are likely to assume correctly that not every gain for the other party constitutes an equal loss for themselves. Furthermore, they recognize that mutually beneficial exchanges can be made: if the landlord is to concede on an issue important to the tenant (say, monthly rent), then in exchange, the tenant can concede on an issue important to the landlord (lease length). In this way, negotiators who receive process feedback reach agreements that are satisfactory to both parties. By contrast, negotiators who receive only outcome feedback are not as successful in recognizing this integrative potential, and those who receive no feedback are the least successful of all.
Analogical Reasoning.
One of the most effective means by which people solve problems is analogical reasoning (Gick and Holyoak, 1983). Analogy is the process of mapping the solution for one problem into a solution for another problem. This involves noticing that a solution to a problem from the past is relevant, and then mapping the elements from that solution to the target problem. For example, a student learning about the structure of the atom furthers her understanding by drawing on her prior knowledge of the structure of the solar system.
In many instances, experienced negotiators have occasion to reason by analogy from a previous negotiation experience but often fail to do so. This problem of failing to capitalize on opportunities to learn by analogy is not limited to negotiators; in general, people’s ability to take full advantage of prior experience is highly limited (Loewenstein, Thompson, and Gentner, 1999). Having solved one problem does not always help in solving an analogous problem if the two come from different contexts. We do not always access prior knowledge, given an analogous situation.
In a study of learning by analogy (Gick and Holyoak, 1983), students were given a problem about how to use radiation to destroy a patient’s tumor, given that the stream of rays at full strength will destroy the healthy tissue en route to the tumor. The solution is to converge on the tumor with low-strength radiation from multiple directions. Having been given this problem and learned the solution, people are then given an analogous one: a general needs to capture a fortress but finds he cannot use his entire army to make a frontal attack. One solution is to divide the army and converge on the fortress from many directions. Even when the tumor problem and the fortress problem are presented in the same session, only about 41 percent of students spontaneously applied the convergence solution to the radiation problem. Though they retained the knowledge about the first solution, they failed to access it. Yet when simply told to “think about the earlier [tumor] problem,” a full 85 percent of students applied the convergence solution to the new problem. Simply reminding people of an analogous problem helps them map
the solution onto the new problem.
The good news for negotiators is that analogy training can substantially improve negotiation performance. In one study, managers who received analogy training were nearly three times as likely to recognize and apply the appropriate principle in future negotiations (Loewenstein et al., 1999). As a result, negotiators who had analogy training outperformed those who did not. For example, in negotiating a deal for a Broadway production, negotiation dyads with analogy training gained an average of twenty-one thousand dollars over their untrained counterparts, who made suboptimal agreements and left large amounts of money on the bargaining table—wasted, as far as both parties were concerned. A subsequent investigation revealed that reading two examples is no more effective than reading just one example unless the learner compares the examples (Gentner, Loewenstein, Thompson, and Forbus, 2009). Moreover, by comparing two or more examples, negotiators can not only perform better in subsequent negotiations, they can more meaningfully analyze their previous negotiation experiences (Gentner et al., 2009).