Adapted from “How High Should You Aim?”, first published in the Negotiation newsletter.
Research shows that moderately difficult goals can energize people and increase their performance. In negotiation, parties with relatively high aspirations often negotiate higher individual payoffs. But there can be a downside: impasse and unethical behavior may be more likely.
In a study conducted by Hannah Riley Bowles of Harvard’s Kennedy School of Government and Linda C. Babcock and Lei Lai of the Heinz School of Public Policy and Management at Carnegie Mellon University, 134 participants acted as either the buyer or seller in a price negotiation. Buyers were given more ambitious or less ambitious aspirations. As expected, buyers with more ambitious aspirations negotiated better terms. Yet the sellers paired with buyers who negotiated a good price were less generous toward counterparts when allocating money in a subsequent exercise, increasing the risk of impasse.
Recent corporate scandals suggest that goal setting can contribute to unethical behavior. Research supports this view. In one experiment, Maurice Schweitzer of the University of Pennsylvania’s Wharton School, Lisa Ordóñez of the University of Arizona’s Eller College of Management, and Bambi Douma of the University of Montana’s School of Business Administration found that when negotiators failed to achieve preset goals easily, they were much more likely to engage in unethical behavior than were negotiators who were asked simply to do their best. This effect was strongest when negotiators believed they would fall just short of their goals unless they behaved unethically.