Business Negotiations: Using Bias to Your Advantage

By on / Business Negotiations

Adapted from “Knowledge of Biases as an Influence Tool,” first published in the Negotiation newsletter.

Articles in Negotiation have highlighted many of the cognitive biases likely to confront negotiators. Work by researchers Russell B. Korobkin of UCLA and Chris P. Guthrie of Vanderbilt University suggests how to turn knowledge of four specific biases into tools of persuasion.

First, they argue that by effectively anchoring the negotiation with an extreme offer, you will not only influence the negotiation, but also actually change the other side’s beliefs about the nature of an appropriate agreement.

Second, you can try to influence the other side’s judgments through her susceptibility to the availability bias—the tendency to rely on readily available information. By carefully choosing comparisons to the current situation, you can persuade the other party about the appropriate settlement. In a legal context, when defendants can cite similar cases where a judicial award was very small, they sometimes can influence the judge’s or jury’s assessment of the value of the case.

Third, Korobkin and Guthrie suggest that when trying to reach agreement, you should frame the negotiation in terms of potential gains for the other party. Doing so persuades the other party to become risk averse, or reluctant to forfeit gains; the other side will be tempted to reduce this risk by reaching agreement.

Fourth, the researchers highlight the use of contrast effects as a persuasion tool. For example, rather than making a flat offer of $30,000 to settle a case, a defendant could offer a choice among $30,000 immediately, $10,000 annually for the next three years, or a $30,000 payment to charity. When compared with the other two options, the $30,000 cash offer is likely to appear more attractive than when it is the only offer on the table. A plaintiff may very well compare the options offered rather than comparing the $30,000 to the option of holding out for more money.

Overall, Korobkin and Guthrie’s ideas can help you use your knowledge of biases to influence your counterpart’s judgments.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.

Related Article: Knowledge of Biases as an Influencing Tool

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