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This course is about the 14 most important psychological principles used in today's negotiation practice. Where they come from, their scientific background and most importantly: how to use them to achieve a much better outcome of your negotiations.
Preparation is perhaps the most important part of negotiation, and the process of preparing is loaded with psychological obstacles that might lead to inadequate or ineffective preparation.
This intermediate level course is meant for business people in management, financial or legal positions. Or for students learning for these functions.
In this course, we will cover the psychological principles in 14 video clips with additional materials. This will take about two hours to complete.
You should take the course if you want to become a better negotiator and if you want to understand where they come from, why they work and why they are so important that may of these founders won a Nobel Prize.
Before you negotiate, you need to think about what you would like by way of an outcome. What result would you like? This involves forecasting, and we'll talk in just a moment about our limited ability to accurately predict what resolutions will be pleasing to us.
Once you decide that there's something you want, you have to ask yourself – do I want to spend more money trying to reach a deal? How much more money? We'll see that this decision is sometimes driven more by impulse than rational thought. We'll also look at how you do research. How much information should you gather before negotiating? Do you want to be 100% ready – even if it's expensive and time consuming to prepare? Or do you want to see if a deal can be worked out before investing too much in research and data?
When you have your research in hand, does it help you negotiate better or does it lead you astray?
Preparation is perhaps the most important part of negotiation, and the process of preparing is loaded with psychological obstacles that might lead to inadequate or ineffective preparation. In this course, we will cover the most important psychological principles associated with preparing for negotiation in 14 video clips. These include:
After taking this course, you are better able to prepare to negotiate effectively and that the group of psychological principles moves from being a set of obstacles to a set of useful tools.
We will look at examples and explanations from many of the leading cognitive and behavioral psychologists of the past 50 years, including insights from Nobel Prize winning decision theorists
When you are thinking of how much to pay for a house, or how much to accept in settlement of your lawsuit, or how much your company is worth – we frequently look first to our memories of seemingly similar items.
But the ones that come most readily to mind are the most vivid – not the most common.
And unfortunately, this distorts our sense of what the comparable value is for our house, our lawsuit, our company.
When setting reference points, be careful about how you treat the first things that pop to mind. They probably pop to mind so easily because they are rare, unusual and not representative.
Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
In behavioral economics, the endowment effect (also known as divestiture aversion) is the hypothesis that people ascribe more value to things merely because they own them. This is illustrated by the observation that people will tend to pay more to retain something they own than to obtain something owned by someone else—even when there is no cause for attachment, or even if the item was only obtained minutes ago.
In psychology, the false-consensus effect or false-consensus bias is a cognitive bias whereby a person tends to overestimate the extent to which their beliefs or opinions are typical of those of others. There is a tendency for people to assume that their own opinions, beliefs, preferences, values, and habits are "normal" and that others also think the same way that they do. This cognitive bias tends to lead to the perception of a consensus that does not exist, a "false consensus". This false consensus is significant because it increases self-esteem. The need to be "normal" and fit in with other people is underlined by a desire to conform and be liked by others in a social environment.
POSITIVE ILLUSIONS, SELF-ENHANCING BIASES, MOTIVATIONAL BIASES
Positive illusions are unrealistically favorable attitudes that people have towards themselves or to people that are close to them. Positive illusions are a form of self-deception or self-enhancement that feel good, maintain self-esteem or stave off discomfort at least in the short term. There are three broad kinds: inflated assessment of one's own abilities, unrealistic optimism about the future and an illusion of control.
Just because “it’s us” our case isn’t better. Just because we want it to be better, our case isn’t better. And just because we think we can control everything, we can’t.
Recognition of these biases will cause a smart negotiator to bring in outside perspectives – perspectives of people who are neutral, who have no vested interest in agreeing with or pleasing you – and then those smart negotiators will actually listen and adjust
When we imagine the future (or recall the past), it is far less imaginative than we think. Our mental picture will be very much like the present and our "imagined" feelings will be strongly influenced by the current state of mind.
Not only is one relying on present circumstances when one makes decisions but also that the brain secretly fills in or imagines details about the future which may or may not have an impact on what will really happen.
How we are feeling in the present affects how we remember the past and how we imagine the future. E.g. a widow's grief of a lost husband five years ago is largely dependent on how she feels now.
Why is that one can't imagine being hungry when one is full? Because just as imagination preview objects, so does it prefeel events. Similarly with sensory imagination, emotional imagination requires the brain to actually feel. The brain cannot feel two things at once just as it can't sense two different things at once. This is why it is difficult to imagine hunger when you are full, imaging happiness when you are depressed, etc.
The negotiation literature is full of stories about competitors who spent far more in fighting than the object of the fight was worth. This phenomenon is called Irrational Escalation. I’ve also heard it called “Competitive Arousal.” The principle is illustrated with a video of the “Dollar Auction”
The conclusion might be: either don’t play or prevent play. Because once you’re playing, you’re committed and it’s hard to break the momentum
Psychologists have demonstrated that people will overpay to create the possibility of something happening. They don’t like impossibility, at least when it comes to gambles to get something they want. These principles are commonly known as the possibility effect and teh certainty effect.
This set of ideas is critically important when you are deciding whether to spend more money on researching a problem. Chances are you will be influenced by the psychology of risk. The next time you are involved at the beginning of a problem or at the end, ask yourself whether you are overpaying because of the Possibility Effect or the Certainty Effect.
When you see only one side you make predictions that are biased in favor of that side. Furthermore, you will be more confident but generally less accurate than when you see both sides. People do not compensate sufficiently for missing information even when it is painfully obvious that the information available to them is incomplete. A simple manipulation that required subjects to evaluate the relative strength of the opponent's side greatly reduced the tendency to underweigh missing evidence.
People look for information that buttresses pre existing hypotheses in places likely to produce it.
Biased Assimilation is about People believing that they “see the world as it is," and this causes them to overweigh information that confirms pre-existing hypotheses, and under weigh disconfirming information
As you can see, there are a large number of biases that can cause us to distort the value of our side of a negotiation in our favor.
Our strongest advice is to start with self-awareness. If you know that you are prone to these biases – and it seems pretty much everyone is, so you probably are too – then you are on the path to correcting them.
And then, the next steps are to get outside opinions that will help you step outside your own perspective and look at the case or negotiation the way a neutral would.
It’s useful to be optimistic and to aspire high, but it’s not useful to set your sights unrealistically high – so high that you break deals rather than make them.
We hope we’ve helped increase your awareness of why you and the other side may overvalue your negotiation – and that we’ve set you on the path to more, better outcomes.
In this quiz you have to answer 10 questions. Good luck!
Richard Birke is a JAMS consultant and has taught dispute resolution for more than 20 years. He is a law school professor and director of the Center for Dispute Resolution at Willamette. Under his leadership, CDR has enjoyed more than a decade of high national rankings in the US and is the 2012 winner of the Ninth Circuit ADR Education Award. Mr. Birke is a two-time award-winning author, as well as an ADR neutral, consultant and trainer. Professor of Law; Director of the Center for Dispute Resolution; Director of the Certificate Program in Dispute Resolution - LL.M. Harvard University - J.D. New England School of Law, cum laude - B.A. Tulane University
Professor Richard Birke has taught dispute resolution for more than 15 years, starting his career at Stanford University and coming to Willamette University College of Law in 1993 to teach and direct the Center for Dispute Resolution. Under his leadership, the CDR has enjoyed high national ranking among academic dispute resolution centers in the United States. He is an award-winning author in the field of dispute resolution, and he has been deeply involved in the practice of ADR.
Professor Birke has trained hundreds of professionals from the fields of business, law, medicine and other disciplines in negotiation, mediation, dispute resolution, trial practice, risk analysis and related fields.