The Psychology of Negotiations

1
The Psychology of Negotiations
The assumption of rationality has been challenged
by quite a few people, on both empirical and
normative grounds. Empirically, it was shown
repeatedly in psychological studies that even the
most sophisticated people consistently violate
the canons of rational behavior. Normatively, we
have already seen that rational models of
negotiation do not always provide us with
satisfactory solution to negotiation problems. As
is demonstrated by the Prisoners dilemma,
rational behavior can result in irrational
outcome. As Schellings example of the
rationality of the irrational demonstrates,
behaving irrationally may yield rational
outcomes. So rational choice theory is in some
cases either silent about the desired solution,
or provides an unsatisfactory result.
2
Key Criticisms of Rational Choice Theory

• Cognitive limitations on
• Information processing
• Ability to perform complex calculations
• Systematic biases

• Hot Cognitive Processes
• Dissonance avoidance
• Avoidance of value tradeoffs
• Wishful thinking
• Schema and expectations driven inferences

3
Situational Constraints on Rational Negotiations

• Psychological Stress Threats, opportunities,
  time pressure
• Uncertainty
• Short foresight (limited horizon)
• Fundamental mistrust of opponent
• Audience effects and audience costs

4
Psychological Factors in Negotiations

• Personality Factors
• Cognitive factors
• Physical and psychopathological factors
• Situational factors
• Group interaction and group-induced influences
• Setting effects

5
Personality Factors

• Cognitive complexity and negotiations
• Tolerance of uncertainty and ambiguity
• Big picture people vs. small details people
• Authoritarian vs. democratic personality
• Team person vs. lone ranger
• Advantages and disadvantages of mental
  liabilities
• Can we fake a personality type and can we take an
  advantage of an image?

6

• Cognitive Biases
• Availability
• Representativeness
• Overconfidence
• Risk propensity
• Compound biases

7
Physical and psychopathological factors

• Fatigue
• Isolation
• Bladder Diplomacy
• Associative locations

8
Situational Factors in Negotiations
Stress and Decision making Components of
Decisional Stress Threat Perception Perception of
Opportunity Time Pressure
Decisional Stress (Threat-Opportunity) Time
Pressure
9
The Inverse U-shape Relationship between Stress
and Decision Quality
10
Group Interaction

• Characteristics of Policy Groups
• Formal and informal hierarchies
• Common history
• Joint future
• Dependence on constituency and superiors
• Two-level pressures

11
Groupthink

• Tendency toward consensus
• Self-suppression of disagreement
• Suppression of disagreement by isolation of
  noncooperative members of the group
• Feeling of harmony and self-satisfaction

12

• How to prevent groupthink?
• Reduce formal hierarchyallow junior participants
  to express themselves
• Leader should absent him/herself from the meeting
  of the group let others run meetings get
  reports about the content of the meetings without
  being directly present
• Leader should not let his/her views known. Would
  be best to express views only at the end, having
  heard the various views in the group.
• Encourage open argumentation and dissent.
  Argumentation and dissent make for vigilant
  decisions
• Allow the group to open up to outside views