If you’re thinking about buying a house, one of your first moves may be to choose a real estate agent who can advise you through the process. If you want a big-name publisher to buy your book, you probably will try to sign on an experienced literary agent as your counselor and advocate. Less formally, it’s common to ask for advice from more experienced coworkers and other colleagues about negotiations.
In tense negotiations, we often choose to consult an expert for advice, preferably someone who has carried out hundreds of similar deals with great success. When we consult with others on our negotiations, we must weigh their advice against our own opinions and research. Past negotiation research finds that we tend to undervalue advice from others and overvalue our own point of view, even when we’re inexperienced at the task at hand.
Principal-Agent Theory in Negotiations: Setting an Agent’s Incentives
That’s not necessarily a bad thing, given that an agent’s incentives will almost always diverge in some way from our own. Whether they recognize it consciously or not (and research suggests that most don’t), even the most ethical agents routinely face a conflict of interest between recommending what’s best for you versus what would benefit them the most financially. A real estate agent may sincerely want to get you a great deal on a house. But because she will gain the most financially from a quick deal at a high price, she may advise you to make a higher bid than she would make if she were bidding on the house for herself.
Unfortunately, the state of mind that commonly drives us to hire agents in the first place—anxiety—makes us highly susceptible to their advice, including bad advice, according to a new study by researchers Francesca Gino of Harvard Business School and Alison Wood Brooks and Maurice Schweitzer of the Wharton School of the University of Pennsylvania. Their findings have significant implications for those of us who become anxious when faced with challenging negotiations.
Negotiation research and accepting biased advice
To explore the link between anxiety and advice, Gino, Brooks, and Schweitzer conducted several experiments in which participants were asked to engage in a decision-making task, such as estimating someone’s weight or completing a difficult math problem. In most of the experiments, the participants then were made to feel either anxious (for instance, by listening to the theme music from the movie Psycho or writing about a past experience that made them feel very anxious) or neutral (by listening to more peaceful music or writing about routine experiences). Finally, they were given the opportunity to receive advice, purportedly from another participant, before having a chance to revise their initial estimates.
Overall, anxious individuals were more receptive to advice even when it should have been obvious that the advice was of poor quality and when the advice giver had a clear conflict of interest.
In one experiment, for example, participants were asked to estimate the amount of money in various jars of coins (shown on a computer screen) and were told that they would be paid a bonus for their accuracy. Some of the participants were asked if they wanted to receive advice from a supposed participant who, they were told, would be paid more if the final estimates of the person they were advising were high (rather than accurate). That is, the participants knew that the advisers would benefit financially if their estimates were off the mark. Despite this clear conflict of interest, anxious participants were very receptive to the biased advice. By contrast, those in a neutral state saw the situation more clearly and rejected the bad advice much more often.
Balancing confidence and anxiety at the bargaining table
What caused anxious decision makers to be especially trusting of advice, whether good or bad? Lack of confidence in their judgments.
That’s an interesting finding, given abundant research showing that negotiators and other decision-makers are generally too confident in their judgments. The common tendency to focus on our own perspective and overlook the other side’s bargaining position can cause us to become overconfident of our abilities and odds of success, according to the University of California—Berkeley professor Don A. Moore. But if self-analysis prior to negotiation leaves us feeling insecure and anxious about how we’ll perform, we might choose to avoid the situation altogether—or bring in an adviser or agent to help us.
Overall, the research suggests that a myopic focus on our own point of view can lead us to be either unrealistically overconfident or overly anxious about our negotiating ability. Strong anxiety, in turn, can cause us to place too much confidence in our advisers’ abilities and give too much weight to their advice.
3 Pieces of Negotiation Advice for Avoiding Poor Judgement at the Negotiation Table
These findings lead to the following three pieces of negotiation advice:
Negotiation Tip #1. Get some perspective. To accurately appraise your bargaining strength, you’ll need to take the other side’s perspective. Before negotiating and during the process itself, analyze your counterpart’s underlying interests, needs, motivations, and alternatives thoroughly.
Negotiation Tip #2. Face your anxiety head-on. Thorough preparation and relaxation strategies can alleviate anxiety, but don’t feel you need to vanquish it all together. Gino, Brooks, and Schweitzer suggest that small amounts of anxiety may be “very constructive,” helping you concentrate and take the task seriously.
Negotiation Tip #3. Maintain a healthy skepticism. Whenever you decide to consult with negotiating advisers—but especially when you are anxious— be sure to vet them carefully, identify potential conflicts of interest, and factor their biases into the advice you receive.
Related Negotiation Skills Article: Example of Negotiation in Daily Life – How Emotions Affect Your Negotiating Ability
How have you avoided misjudgments in negotiations? Leave a comment below.
Resource: “Anxiety, Advice, and the Ability to Discern: Feeling Anxious Motivates Individuals to Seek and Use Advice,” by Francesca Gino, Alison Wood Brooks, and Maurice E. Schweitzer. Journal of Personality and Social Psychology, 2012.
Adapted from “High anxiety, poor decisions?,” from the January 2013 issue of Negotiation Briefings.