Negotiators often are advised to seek out lots of information about their counterpart, including information about the other party’s power. One of the most important measures of power is a negotiator’s BATNA, or best alternative to a negotiated agreement—the ability to walk away, secure in the knowledge that you can get what you want somewhere else.
Interestingly, when one party is more powerful than the other in a negotiation, that knowledge leads negotiators to reach less efficient outcomes than they would if they did not know about the power asymmetry, researchers Ricky S. Wong (Hang Seng Management College, Hong Kong) and Susan Howard (London School of Economics and Political Science) find in a new study published in Group Decision and Negotiation. This happens because of the way more powerful parties react to the knowledge that they’re more powerful. Specifically, they focus more on claiming value, neglect opportunities to create value, reach less accurate determinations of the other party’s preferences, and share less information about their own preferences. When negotiators know they’re more powerful, they tend to believe that a fair agreement should reflect their power advantage, while weaker negotiators tend to favor equal outcomes.
The study results remind us that to increase the overall size of the pie, the powerful need to be vigilant about focusing on meeting both parties’ needs.