When Not to Show Your Hand in Negotiations

In all your negotiations, you must calculate the risks and rewards of sharing information with your counterpart.

By on / Negotiation Skills

Negotiations

Here, we consider four types of information that may be best kept under wraps: sensitive or privileged information, information that isn’t yours to share, information that diminishes your power, and information that may fluctuate during negotiations.

Fearful of being hurt by revealing too much information, most negotiators play their facts and preferences close to the vest. At the other end of the spectrum, the current negotiation theory advises us to cooperate whenever possible, revealing information to create maximum value. In all your negotiations, you must calculate the risks and rewards of sharing information with your counterpart. Here, we consider four types of information that may be best kept under wraps.


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1. Sensitive or privileged information.
It can be tough to decide whether to disclose private or sensitive information, such as trade secrets and financial data, as well as your preferences (targets, reservation prices, needs, and interests). This information is often necessary to identify tradeoffs and create value, but there’s also the risk that your counterpart will take advantage of your disclosure.

In any negotiation, you’re likely to have information about the other party or about the deal (industry facts, economic health, new products, and so on) that he might not know you have. To gain some measure of your counterpart’s trustworthiness, plant a “trust landmine”: ask some questions to which you already know the answers. If someone avoids your information requests or if he lies outright, that’s one sign that you should be careful about what you reveal—or call off talks altogether.

Of course, someone who answers a few questions truthfully might not always behave honestly. Nonetheless, trust landmines offer a reasonably good way of determining if a person is leveling with you.

2. Information that isn’t yours to share.
When you negotiate as someone’s agent—whether as a lawyer, a broker, or your firm’s representative—disclosure decisions may not be yours to make. Instead, you’ll first need to discuss the risks and benefits discussed here with your principal. Even if the information doesn’t technically “belong” to someone else, disclosure might hurt that person. Suppose you’re negotiating a purchase from one supplier. You could be tempted to disclose another supplier’s bottom line—but it might be wise to consult this party first.

3. Information that diminishes your power.
If you have less power than your counterpart, think through the potentially negative consequences of making “information concessions.” Physically injured plaintiffs often are tempted to offer information about their current injuries in return for an early settlement, though they might procure greater damage awards later if longer-term injuries emerge. And in an overheated real-estate market, the bidder who expresses the greatest desire for a given house risks being exploited by a seller with multiple offers. Evaluate whether your desire for a given outcome might cause you to reveal too much and be exploited.

4. Information that may fluctuate.
“Facts” may change over time; prices and preferences certainly will. When important information seems unstable, you might choose to wait to reveal it or else seek a deal provision to later modify the information you share. Contractual contingencies allow you and your counterpart to “bet” on your differing predictions; you also can add clauses that permit renegotiation should facts or conditions change.

Have you ever regretted showing your hand too early in negotiations? Share your story in the comments.

Adapted from “Know When to Show Your Hand,” by Carrie Menkel-Meadow (professor, Georgetown University Law Center), first published in the Negotiation newsletter, June 2007.


Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.


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One Response to “When Not to Show Your Hand in Negotiations”

  • Great article. Me and my business partner always see differently in terms of what information to share with the other side. I always tend to a more collaborative approach where as my partner tends to be more secretive. How do you identify what “diminishes your power” in negotiation? In theory one could argue that most pieces of information may end up being used against you…

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