What Makes Negotiators Happy?

By — on / Business Negotiations

Adapted from the Negotiation Newsletter.

The question above may seem silly. Getting more of what we care about seems the obvious answer. Yet negotiators often don’t know how to accurately assess a good outcome; instead, they rely on outside indicators to determine their satisfaction, for instance by comparing their outcomes to those of others. Your negotiated annual salary of $100,000 appears quite different if you learn that others in your position are earning $110,000.

In striking research on the effect of social comparisons on negotiator satisfaction, Victoria H. Medvec of Northwestern University, Scott F. Madey of Shippensburg University, and Thomas Gilovich of Cornell University found that Olympic athletes who won bronze medals were happier than those who won silver medals. Why? According to the authors, people naturally think about what might have been. Silver-medal winners think about how, if they had performed slightly better, they might have won the gold. By contrast, bronze-medal winners are delighted to be medalists at all, unlike those who finished fourth or lower. Thus, we can predict that negotiators who compare themselves to those who reach lesser outcomes will be more satisfied than will negotiators who compare their results to those who achieve better outcomes.

What if no social comparisons are available? In this case, Edward E. Kass of St. Joseph’s University in Philadelphia shows that how the other party treats us becomes very important. In sum, a natural hierarchy appears to determine negotiator happiness. When our outcomes are easy to assess, they strongly affect our satisfaction. When outcomes are hard to assess, we make social comparisons. When such information is not available, interactional fairness—how the other side treats you—becomes critical.

Ensuring that your counterpart walks away happy increases the chance that she will do business with you again. You can boost her satisfaction by pointing out how much better she did than others and by treating her fairly.

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: The Link Between Happiness and Negotiation Success

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