Negotiations are everywhere, in almost every element of our daily lives, but how do we understand negotiations? It turns out that the way we frame the idea of negotiation has a lot to do with how we understand value and happiness.
In this edition of Two Guys on Your Head, Dr. Art Markman and Dr. Bob Duke discuss the various elements of negotiation.
In many negotiation situations, the value of the commodities being exchanged is relative: Relative to the needs of each party in the negotiation, and relative to other elements outside the exchange.
These “other elements” are what Amos and Tversky refer to as “anchors.” Anchors are things in the environment that determine what you consider the value of the items to be.
For example, say you are selling a car that you think is worth $10,000, and someone offers you $5,000, you may say, “well...I’ll take $7,000 — tops!” So, $5,000, is your “anchor” in that case. But if someone offers you $8,000, you might say, "I can only go as low as $9,000 for this gem!” A low anchor may drag you down, whereas with no anchor at all, you could stay at the $10,000 mark.
This shows that, even when there are numbers involved, we are not rational decision makers. A lot of the value we place on things depends upon elements totally unrelated to what you are negotiating about.
So what is some advice for the average negotiator who wants to limit the stress in their lives? Markman and Duke suggest a couple things.
First, take a step back. Decide what you want in the long run, and you are less likely to worry about “winning” in the moment just because it may feel good.
Second, think of the negotiation as a journey you are taking with another person as opposed to a tug-of-war. In this scenario you may give up something that means a lot to someone else, but not that much to you, and vice versa. Walking forward together brings you to a place where both parties win.
Some other aspects of how we approach negotiation have to do with gender. In the bonus clip below, Art and Bob talk about what the research says about the different ways men and women view the world of negotiation.
