It may seem elementary, but one of the first questions you should ask when you’re thinking about negotiating for an important purchase is whether you truly want or need it.
We tend to assume that future events—such as buying a new car or signing a seemingly important contract—will have a lasting impact on our overall happiness. But the thrill of just about any event usually wears off much sooner than we predict, research by psychologists Daniel Gilbert of Harvard University and Timothy Wilson of the University of Virginia has found. When focusing on a single purchase, we fail to consider that it may quickly be overshadowed by other, more pressing events at home and at work.
Moreover, we often pay too much attention to the vivid, flashy aspects of a deal. As an example of this vividness bias, Harvard Business School professor Max H. Bazerman has observed that when choosing among job offers, graduating MBA students often base their decisions on aspects that will most impress their peers, such as a high starting salary or a position with a well-known firm. Within a few years, many of these graduates end up switching to work that is less prestigious, but more meaningful to them.
In a similar manner, buyers sometimes fall into the trap of focusing exclusively on getting the lowest price possible—whether for a car or a purchasing contract at the office—with an eye toward bragging about their negotiating prowess to others.
In negotiation, it’s important to work hard to get a low price. But before you start haggling, be sure you really want the item at stake. Educate yourself on your potential purchase as well as other viable alternatives. View sellers’ claims with skepticism, as they may be trying to lure you into an impulse purchase. In addition, consider the negotiation in light of the needs you, your family, or your organization may have. If saving money is critical, then passing on a particular deal—even a great one—may be the smartest choice.
Adapted from “Buyers, Be Aware of These 4 Potential Traps,” first published in the Negotiation newsletter, May 2010.