The following items are tagged Daniel Kahneman.
In past articles, we have highlighted a variety of psychological biases that affect negotiators, many of which spring from a reliance on intuition.
Of course, negotiators are not always affected by bias; we often think systematically and clearly at the bargaining table.
Cognitive biases affect even smart and highly educated negotiators. Unfortunately, awareness of our biases is not enough to prevent their having a negative impact on our next negotiation.
In past issues of Negotiation, we’ve reviewed the anchoring effect – the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching for data that confirms the anchor’s viability. This testing is likely to affect your judgment – to the other party’s advantage.
Psychologists Amos Tversky and Daniel Kahneman identified the anchoring effect in 1974. Participants watched a roulette wheel that, unknown to them, was rigged to stop at either 10 or 65, the estimated the number of African countries belonging to the United Nations. For half of the participants, the roulette wheel stopped on 10. They gave a median estimate of 25 countries. For the other half, the wheel stopped on 65. Their median estimate was 45 countries. The random anchors dramatically affected judgment.
While negotiations are inherently risky, there are proven ways to reduce risk and improve your odds of success. To do so, you must focus on the very basis of your relationship with the other party: trust.
Think about a time when you lost trust in a fellow negotiator. Did you try to renegotiate the terms of
Adapted from “Trying to Make a Sale? Avoid These Common Pitfalls,” first published in the Negotiation newsletter, April 2010.
Why is it that even in sluggish markets, some homes are plucked off the real estate listings within days or weeks, and others sit for months, even years? Location and curb appeal have something to do with
Adapted from “The Enduring Power of Anchors,” first published in the Negotiation newsletter, October 2006.
In the Negotiation newsletter, we have reviewed the anchoring effect—the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching
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