Negotiation Psychology Quiz

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Questions and Answers

What is the primary issue at the heart of bounded rationality in negotiations?

Ability to make perfect decisions every time

Cognitive limitations and lack of information (correct)

Maximizing outcomes without any limitations

Complete understanding of all negotiation details

What term describes the approach where negotiators settle for a satisfactory outcome rather than the optimal one?

Optimizing

Maximizing

Rationalizing

Satisficing (correct)

Which psychological force is essential to understand when examining negotiators' effectiveness?

Emotional intelligence

Psychological forces that limit effectiveness (correct)

Cultural background of the negotiators

Technical skills of the negotiators

What does rationality in negotiations fundamentally aim to achieve?

Maximizing the negotiator's interest Signup and view all the answers

Which of the following is NOT a reason for bounded rationality in negotiations?

Complete knowledge of all negotiation strategies Signup and view all the answers

Which type of frame primarily focuses on achieving a specific outcome?

Outcome Signup and view all the answers

What is a potential consequence of mismatched frames between negotiating parties?

Sources of conflict Signup and view all the answers

What does the 'Interests' frame in negotiation typically emphasize?

Underlying desires and needs Signup and view all the answers

Which cognitive error can impede negotiator performance?

Cognitive biases Signup and view all the answers

Which frame reflects how parties define themselves in negotiation?

Identity Signup and view all the answers

What is the key difference between Program A and Program B concerning their outcomes?

Program A guarantees saving 200 people while Program B provides a chance of saving 600. Signup and view all the answers

What explains why individuals may prefer a certain outcome over a probabilistic one?

Loss aversion principle. Signup and view all the answers

If a scenario is framed in terms of losses, how does it affect people's decision-making according to Prospect Theory?

People become more risk-seeking. Signup and view all the answers

In the gain-frame condition of the scenario, what percentage of participants chose Program A?

72% Signup and view all the answers

Which option did participants prefer in the loss-frame condition according to provided statistics?

Program A where 400 will die. Signup and view all the answers

What is a major outcome of perceptual distortion during negotiation?

Stereotyping and halo effects Signup and view all the answers

What does Prospect Theory suggest about the subjective value of gains compared to losses?

The displeasure of losses outweighs the pleasure of equivalent gains. Signup and view all the answers

What is the outcome of adopting Program D in the context of the unusual disease?

There is a chance that no one will die or that 600 will die. Signup and view all the answers

What process allows individuals to respond appropriately to their environment?

Perception Signup and view all the answers

How does selective perception impact negotiations?

It reinforces existing beliefs by filtering out contrary information. Signup and view all the answers

How does the shape of the value function for losses compare to that for gains in Prospect Theory?

It is steeper for losses than for gains. Signup and view all the answers

What is an example of projection in social interactions?

Assuming others would feel the same way you do towards an event Signup and view all the answers

Which of the following best describes halo effects?

Forming an opinion based solely on a single attribute Signup and view all the answers

What is framing in the context of negotiation?

The subjective mechanism through which people evaluate situations Signup and view all the answers

How do cultural extremes influence stereotypes?

They often overshadow more common attributes and similarities. Signup and view all the answers

Which of the following statements is true regarding heuristics in perception?

Heuristics simplify complex information processing. Signup and view all the answers

What effect does cognitive bias have on negotiations?

It can distort perceptions and hinder clarity. Signup and view all the answers

What is the primary focus of stereotyping in social interactions?

Assigning characteristics based on social categories. Signup and view all the answers

What does the irrational escalation of commitment refer to in negotiations?

Maintaining commitment to a negotiation strategy despite its irrationality Signup and view all the answers

What assumption is made by negotiators with mythical fixed-pie beliefs?

They assume negotiations typically involve a finite set of resources. Signup and view all the answers

What does anchoring and adjustment refer to in decision making?

Using initial information to base subsequent judgments and decisions. Signup and view all the answers

What is the winner's curse in negotiations?

Settling quickly on a deal, then regretting it later. Signup and view all the answers

How does overconfidence manifest in negotiators?

By assuming it is easy to predict outcomes. Signup and view all the answers

What does the law of small numbers indicate?

People often draw conclusions based on few instances. Signup and view all the answers

What is the endowment effect in negotiation?

Overvaluing items merely because they are owned. Signup and view all the answers

What is a key consequence of negative emotions in negotiations?

They may escalate conflict and lead to retaliation. Signup and view all the answers

What does ignoring others' cognitions lead to in negotiations?

Incomplete information and poor decision-making. Signup and view all the answers

What can be an effective strategy for managing cognitive biases in negotiation?

Discuss biases openly within the team and with counterparts. Signup and view all the answers

How can positive emotions affect negotiation processes?

They generally promote integrative processes and collaboration. Signup and view all the answers

Which term describes the tendency to devalue concessions made by the other party?

Reactive devaluation Signup and view all the answers

What is a common misconception regarding emotional expression in negotiations?

Strategic expression of emotions can be beneficial. Signup and view all the answers

Study Notes

Limits to Rationality

Negotiators make decisions that maximize their interests, this is considered rationality
Bounded rationality is the idea that people make sub-optimal decisions due to many factors like cognitive limitations, lack of information, and insufficient time
It is critical to understand the psychological forces that limit negotiator effectiveness

Perception in Negotiation

Perception is the process of connecting with the environment and assigning meaning to information.

The Process of Perception

Influenced by the person's current state of mind, role, and understanding of prior communications.
People interpret their environment to respond appropriately.
Because of the complexity of environments, individuals develop heuristics or "shortcuts" to process information, which can lead to errors.

Perception Distortion

There are 4 major perceptual errors: stereotyping, halo effects, selective perception, and projection.

Stereotyping and Halo Effects

Common perceptual errors
Stereotypes are attributing attributes to another based on membership in a social or demographic category.
Halo effects are similar, individuals generalize about a variety of attributes based on knowledgeof one attribute.

Comparing Cultures as Overlapping Distributions

People differ across cultures, but also within cultures.

Stereotyping from The Cultural Extremes

Stereotypes often focus on the extremes and ignore similarities.

Selective Perception and Projection

Selective perception: the perceiver selects information that supports a prior belief and filters out information that contradicts it.
Projection: assigning characteristics you possess to others. This occurs to protect one’s self-concept.

Framing

Frames are a subjective mechanism for evaluating and making sense of situations.
They define persons, events, or processes.
They impart meaning and significance.
They lead people to pursue or avoid subsequent actions.

Types of Frames

Substantive (focuses on key issues)
Outcome (oriented towards achieving a specific outcome)
Aspiration (oriented towards achieving a broader set of interests)
Process (focuses on procedural issues)
Identity (how parties define themselves)
Characterization (how parties define the other party)
Loss-Gain (framing choices as gains or losses)

How Frames Work in Negotiation

Negotiators can use more than one frame.
Mismatched frames between parties lead to conflict.
Parties negotiate differently depending on the frame.
Specific frames may be likely to be used with certain types of issues.
Certain types of frames lead to particular types of agreements.
Parties can assume a particular frame based on a number of factors.
The frame of an issue changes as the negotiation evolves.

Interests, Rights, and Power

Frames used by parties in conflict:
- Interests: Focuses on underlying interests.
- Rights: Focuses on legitimacy, correctness, and fairness.
- Power: Focuses on who is stronger.

Cognitive Biases in Negotiation

Negotiators make systematic errors when processing information.
These errors are called cognitive biases and impede negotiator performance.

Cognitive Biases

Irrational escalation of commitment: maintaining commitment to a course of action even when irrational.
Mythical fixed-pie beliefs: assuming that all negotiations involve a fixed pie, even when they don't.
Anchoring and adjustment: The effect of the standard (anchor) against which subsequent adjustments (gains or losses) are measured.
Issue framing and risk: Frames can influence people to seek, avoid, or be neutral about risk in decision-making.
Availability of information: Information that is presented vividly or attention-grabbing is easier to recall, and becomes central in evaluating events and options
The winner's curse: The tendency to settle quickly on an item and then afterwards feel discomfort about a win that came too easily .
Overconfidence: The tendency to believe that one's ability to be correct or accurate is greater than it actually is.
The law of small numbers: The tendency of people to draw conclusions from small sample sizes
Self-serving biases: The tendency to overestimate the role of personal or internal factors and underestimate situational factors in explaining another person’s behavior.
Endowment effect: The tendency to overvalue something that you own or believe you possess.
Ignoring others’ cognitions: Negotiators often don't ask about the other party's perceptions or thoughts.
Reactive devaluation: The process of devaluing the other party’s concessions simply because the other party made them.

Managing Misperceptions and Cognitive Biases in Negotiation

The best advice that negotiators can follow is to be aware of the negative aspects of these biases.
Engage in discussions about these biases within a team and with counterparts.

Mood and Emotion in Negotiation

The distinction between mood and emotion is based on three characteristics: specificity, intensity, and duration.

Mood, Emotion and Negotiation

Negotiation creates a range of positive and negative emotions.
Positive emotions lead to integrative processes, positive attitudes towards the other side, persistence, and better outcomes.
Negative emotions can lead to competitive processes, difficulty analyzing the situation, escalation of conflicts, retaliatory behavior, and poor outcomes.

Mood, Emotion, and Negotiation

Aspects of the negotiation process can lead to positive and negative emotions:
- Positive emotions: Can arise from fair procedures, favorable social comparison.
- Negative emotions: Can arise from unfair practices, unfavorable social comparison.

Using Emotions Strategically

Emotions can be used strategically as negotiation gambits.

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Description

Test your understanding of the psychological aspects of negotiation, including the concepts of rationality and perception. Explore how cognitive limitations and perceptual errors can impact decision-making processes in negotiations.