Negotiation Psychology Quiz

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.