Bargaining Power in Negotiations: Leveling the Playing Field

Bargaining power in negotiations can have a dramatic effect on perceptions and behavior, research shows. Here’s advice on how to encourage negotiators who feel powerful to keep your best interests in mind.

By — on / Negotiation Skills

Wealth and Fairness

Powerful negotiators can be formidable opponents. That’s in part because their bargaining power in negotiations—such as a high position in a hierarchy, wealth, or a great BATNA (best alternative to a negotiated agreement)—gives them considerable leverage. In addition, powerful individuals tend to demand more for themselves, in violation of fairness norms. Here’s a closer look at the effects of bargaining power in negotiations—including advice on how to level the playing field.

Accept or Reject?

In a study published in the Journal of Experimental Social Psychology, researcher Yi Ding (Southwest University in China/Vrije Universiteit Amsterdam) and his colleagues looked at whether the wealthy are less accepting of unfair offers than those with fewer resources. 

The researchers had participants play the well-known “ultimatum game” from the field of economics in which one party, the “proposer,” receives a sum of money and must decide how much of it, if any, to offer to a partner, the “responder.” The responder then must decide whether to accept or reject the proposer’s offer. If the responder accepts the offer, both players receive the money as allocated. If the responder rejects the offer, neither player gets to keep any of the money.

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In one online experiment, 630 participants recruited in China first played a game of luck in which they could earn a high bonus, a moderate bonus, or no bonus at all. This induction was found to lead the participants to temporarily feel wealthy, of moderate means, or poor, respectively.

Next, the participants played the role of the responder in an ultimatum game. All were told that their proposer had been allocated CN¥10 (about $1.60 at the time of the experiment) and had proposed a split of CN¥8 for themselves and CN¥2 for the participant—clearly, an unfair offer. Participants then decided whether to accept the offer. About half were told they would get nothing if they rejected the offer; the other half were told they would receive the money that the proposer offered even if they formally rejected it. (This was done to rule out the possibility that the “poor” would feel they couldn’t afford to sacrifice even an unfair offer.)

The results? In both conditions, those induced to feel wealthy rejected the unfair offer about 73% of the time, as compared to a 55% rejection rate for those in the moderate and poor conditions. When participants’ wealth was measured by family income, the wealthier group again was less accepting of unfair offers than were those with lower family incomes.

A Sense of Entitlement

The experimenters tested and ruled out the possibility that those endowed with wealth rejected unfair offers because they felt an altruistic sense of responsibility to enforce fairness norms.

Rather, a different motivation emerged for “wealthy” participants’ rejection of unfair offers: their sense of entitlement, as measured by their level of agreement with statements such as “I deserve fairer treatment than others.” Those who felt wealthy were less accepting of unfair offers because they felt entitled to receive more. 

The results imply that negotiators who are (or who feel) financially well off may be especially prone to rebelling against offers that give them less than others. Given that the study was conducted in China, the researchers also suggest that their results show that “people in a rapidly changing society find it exceptionally easy to justify their relative wealth,” including wealth that “occurs by mere chance.”

Leveling the Effects of Bargaining Power in Negotiations

Overall, the study adds to a growing literature on the role of power in negotiation and particularly the risks associated with bargaining power in negotiations. The following guidelines on power in negotiation can help you enlist powerful negotiators to work with you rather than against you:

  1. Align your goals with theirs. To gain the support of powerful negotiators, show them how advancing your interests and goals can help them. For example, if the CEO wants you to take on a time-consuming assignment, they might agree to ask your boss to temporarily lighten your workload if you promise to make the new assignment your top priority. 
  2. Make them responsible for you. Powerful parties become more generous and empathetic when they feel responsible for others, Adam D. Galinsky and his colleagues have found. For this reason, asking your fellow negotiator for a favor or otherwise appealing to their sense of generosity may inspire cooperation. 
  3. Increase their accountability. Asking the powerful to justify their decisions may encourage them to see your perspective, research by Philip E. Tetlock of the University of California at Berkeley suggests. If a potential customer tells you she’s negotiating with your competitors, for example, you might ask her if she’s willing to share any offers she receives with you. If she is, you may be able to identify how you could do better. 

What other effects of bargaining power in negotiations have you observed?

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