Why We Misjudge What’s Fair

By — on / Business Negotiations

Adapted from “When Self-Interest is Sabotage,” by Max H. Bazerman (Professor, Harvard Business School). First published in Negotiation.

Researchers Frederick G. Banting and John Macleod were jointly awarded the Nobel Prize in 1923 for their partnership in the discovery of insulin. After receiving the prize, Banting publicly contended that Macleod, the head of their laboratory, had been more of a hindrance in the research than a help. For his part, Macleod, in speeches about the work that led to the discovery, routinely failed to mention that he had had a research partner.

Both of these pioneering scientists underestimated the value of the other’s contribution to their discovery. Why?

One reason may well be egocentrism, a common cognitive bias. Studies have consistently shown that our perceptions and expectations are biased in a self-serving manner. When we’re presented with identical information, we interpret it in dramatically different ways, depending on our role. Typically, we first determine our preference for a certain interpretation or outcome that benefits us, then justify this assessment on the basis of fairness. We adjust the importance of the qualities that affect our judgment of what is fair—downplaying some, heightening others—until we’re able to view ourselves in the best possible light. This phenomenon suggests how both Banting and Macleod may have adopted self-interested views of their partnership.

Egocentrism is a critical barrier to reaching resolution in negotiation. It leads us to believe that it is honestly fair for us to have more of a given resource than an independent adviser would judge. We want to be fair, but we fail to recognize we’re interpreting information in a biased, self-serving manner.
How can you reduce your own natural egocentrism? Political philosopher John Rawls wrote that just decisions should be made under a “veil of ignorance.” A similar principle applies in negotiations. Aim to make the decision you would make if you didn’t know what your role was in the negotiation.

It’s also useful to consider the other side’s view. In a study of academic coauthors, Eugene Caruso and colleagues asked each author how much credit he or she deserved for the completed book. Together the coauthors claimed more credit than existed—more than 100% total. When each was instead asked how much credit their coauthor deserved, the level of overclaiming dropped substantially. Talking with—and thinking about—the other side reduces our tendency to focus on ourselves, and reduces the bias in our 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: What’s Fair in a Negotiation?

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