As negotiators, we understand the importance of estimating the likely parameters of an agreement in upcoming talks. Yet even the most experienced negotiators have moments of surprise at the bargaining table when they realize that their estimates were far off the mark.
A new negotiation study by professor Michael P. Haselhuhn of the University of California at Riverside suggests a novel way for negotiators to reach more accurate estimates of the bargaining range in a given negotiation. Specifically, Haselhuhn draws on research by psychologists Amos Tversky and Derek J. Koehler on support theory, which finds that people consider an event to be more likely to occur when it is described in terms of its components—that is, when it is “unpacked”—as compared with when they consider it as a single package. For example, people tend to believe that “heart disease, cancer, or some other natural cause” (an unpacked event) are more likely to lead to death than “natural causes,” even though both descriptions include the same causes and thus carry the same possibility of death. Because unpacking reminds us of outcomes we might have overlooked, it leads us to view a cluster of events as more likely than when they are packed together.
In four experiments, Haselhuhn found that participants who unpacked their potential positive outcomes prior to engaging in a negotiation simulation believed those outcomes to be more likely to occur, set higher aspirations and more aggressive bottom lines, and claimed more value. For example, in one experiment, MBA students were instructed to negotiate for a taxi fare from school to their homes. Some of the students were asked to unpack their judgments of the likely outcome, specifically how likely the driver would be to accept an offer above $10 and offers within a series of five descending ranges ($9.01–$10, $8.01–$9, $7.01–$8, and so on). By contrast, those in the “packed” condition simply were asked to estimate the likelihood that the driver would agree to a fare above $10 or below $10. As compared with those who did not unpack their estimates, those who unpacked reached more accurate estimates of how low drivers would go and negotiated better fares. Interestingly, however, students in both conditions underestimated drivers’ willingness to negotiate.
It seems that envisioning various positive outcomes, rather than just one, boosts negotiators’ optimism before bargaining, and that optimism leads them to set more ambitious goals and pursue them assertively. However, Haselhuhn found that unpacking a range of potential negative outcomes has the opposite effect: It inspires greater pessimism, lower demands, and less value claimed relative to negotiators who did not unpack.
In sum, considering various possible positive outcomes—but not negative ones—before negotiating a single issue, such as price, could give you the confidence you need to aim high and achieve better results. Pointing out the various negative consequences a counterpart could face if she walks away from a deal with you could also be a useful strategy.
“Support Theory in Negotiation: How Unpacking Aspirations and Alternatives Can Improve Negotiation Performance,” by Michael P. Haselhuhn. Journal of Behavioral Decision Making, 2014.