414 / CONDUCTING NEGOTIATIONS
Avoiding decision traps
Making the right decisions
Understanding the decision traps that
negotiators can fall into will help you
avoid making the same mistakes
yourself, and may allow you to use the
other party’s errors to leverage your
own power. There are many tactics and
strategies you can use to avoid decision
traps or to use them to your advantage.
Most negotiators believe that they are rational. In reality, many
negotiators systematically make errors of judgment and irrational
choices. It is important for you to understand and try to avoid making
these common errors, as they lead to poor decision-making.
WATCH YOUR TIMING
To keep from feeling that you
have not made the best
possible deal, never accept
the first offer that is made,
even when it is a great offer.
Always negotiate a little.
Tip
Understanding decision
traps may allow you to
use the other party’s
errors to leverage
your own power
Hot and cold coginition
Psychologists have identified two
approaches to decision-making: “hot
cognition” and “cold cognition.” High-
speed, pressurized decisions use “hot
cognition,” while logical, slow decisions
use “cold cognition.” In high-pressure
environments try to overcome your
emotions and use “cold cognition.”
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AVOIDING DECISION TRAPS / 415
Do not hesitate to reverse your original decision and
cut your losses; create an exit strategy even before
you get involved in the negotiation process.
Set a benchmark that could give you an advantage
when your counterpart is ill-informed, but be aware
that they could do the same to you.
Engage a trusted expert who will challenge your
overconfidence in your ability to negotiate and put
pressure on you to do a reality check.
Make sure that your offer is based on solid research.
When buying, demand a performance guarantee of
the product.
Invest time and energy in looking for information that
is not easily available. You will often find accessible
information that can improve your position.
Present information more or less vividly to
influence others, but be wary of overvaluing
information that is attractively presented to you.
As a negotiator, be aware of how the other party
frames the situation and presents its offers.
Approach each negotiating event as a unique case.
They are never identical.
Strategies for decision-making
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416 / CONDUCTING NEGOTIATIONS
Understanding decision errors
ERROR DESCRIPTION
Acting contrary to your self-interest by increasing your
commitment to an original decision, despite the fact that
this decision produces negative outcomes (“throwing
good money after bad”).
Using a faulty anchor as a benchmark from which
to make adjustments and decisions. An ill-informed
home-buyer, for example, may use the seller’s asking
price as an anchor for their counteroffer, rather than
solid due diligence on home values.
Believing that you are more correct and accurate
than you actually are. This leads to an overestimation
of your power within the negotiation, the options
open to you, and the probability of your success.
If you settle quickly on a deal when selling, feeling that
the “win” was too easy and that you could have gotten
more from the deal.
If you settle quickly on a deal when buying, thinking
“I could have gotten this for less” or “What is wrong
with this item? I must have gotten a bad deal.”
Nonrational
escalation of
commitment
Anchoring and
adjustment
Overconfidence
The winner’s
curse
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AVOIDING DECISION TRAPS / 417
ERROR DESCRIPTION
Making a decision based on limited information,
even though information is readily available or would
have been available if enough effort had been put in
to finding it.
Recalling and assigning more weight to information that
was delivered in a vivid fashion, and giving less weight to
equally important, but dull, information.
Making decisions based on how the issues were framed
(for example, a glass may be described as being half
empty or half full). Risk-averse negotiators are more
likely to respond positively to offers that are framed in
terms of losses, for example, because they are afraid of
losing out; risk-seeking negotiators, by contrast, will
respond slowly, because they are willing to wait for a
better offer.
Drawing a conclusion based on a small number of
events, cases, or experiences, believing that your limited
experience allows you to generalize from it.
Information
availability
bias
Vividness bias
Framing and risk
Small numbers
bias
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