How Behavior Influences Negotiation Outcomes
How can we influence our counterpart in ways that go beyond the numbers we present? The research presents a multitude of behaviors that subconsciously affect the other side.
Handshaking. Long, sometimes adversarial, joint opening sessions, once a staple of caucus-based mediations, have rightly fallen out of favor. Yet, are we missing something when we skip personal introductions altogether?
Scientists have repeatedly demonstrated that touch has a powerful impact on us. One creative study recorded the physical interactions of National Basketball Association teammates at the beginning of the season, i.e., handshakes, hugs, etc. They found that the amount of physical touch correlated with winning on the court, even after controlling for preseason expectations. Another study found that servers who touch their customers on the shoulder or hand generally receive higher tips.
But how does touch positively affect an adversarial situation? Researchers from Berkeley, Harvard, and the University of Chicago involved hundreds of participants to study whether a simple handshake had a statistically significant effect on negotiation outcomes. They used various methods, including not giving instructions to the negotiating dyads on whether to shake hands, instructing only one partner to reach out, encouraging both parties to shake, and discouraging them to connect physically. The results showed that handshaking significantly improved the likelihood of resolution, even in more antagonistic negotiations, because it reinforced the perception of the opponent’s good faith.
Perhaps the most surprising result was that those who greeted each other physically were less likely to lie during bargaining. This held true even when doing so would have been economically advantageous. So, offer your hand to everyone and encourage your clients to do the same.
Humor. Even if our joke gets laughs, will it help our client or potentially backfire? Scientists have published hundreds of papers on humor, with some surprising results. A meta-analysis of 89 studies found that the effect of humor on persuasion was mild at best. At the same time, a study of 400 Israeli and Palestinian students reading emails about the then current political conflict from people they believed were on the opposite side concluded that comical comments had a positive effect on perceptions of the other party and openness to dialogue.
However, the researchers also identified at least one situation where a joke is likely to undermine influence. While self-deprecating humor from the more powerful party increased the prospects of resolution, it had the opposite effect when the less powerful party tried that approach. So, if your comment is truly funny and appropriate, it may help, but be careful about making fun of yourself if you and your clients are the underdogs.
Power. Speaking of power, what exactly is it and how does it affect negotiations? Power in the negotiation context has been defined as “the probability that a negotiator will influence a negotiation outcome in the direction of his or her ideal outcome.” Researchers from Singapore and the United States, citing dozens of studies, identified four sources of power: alternatives to the current negotiation, information about the other side’s position, status between the parties, and social capital in the form of connections or influence beyond the current bargaining. Other scholars distinguish power from status in that the former is more objective, deriving from resources or position in relationships, while the latter comes from the subjective judgments of others.
Problems are more likely to result when there are asymmetric levels of power between the parties. A team of American and British professors found that those who feel subjectively more powerful are prone to engage in overconfident decision-making. Another team of international scientists found that extreme opening offers were significantly more likely to offend lower-power parties and lead them to abandon settlement talks. Thus, if your clients know they have the advantage going into bargaining, overplaying their hand is a real risk.
How can you help your lower-power client? One of the challenges is getting the higher-power party to the table. A team of international scholars found that while less powerful groups generally want to first tackle more significant issues to change the status quo (and vice versa), they were more successful in getting talks going when they focused on working on the less consequential issues first. Thus, if you are struggling to get the more powerful party to negotiate, consider proposing to start discussions with relatively minor issues.
Unsurprisingly, power has a profound effect on the parties once they start talking. Researchers from the University of Chicago and Northwestern University examined situations where bargainers had unequal power levels. They found that high joint gains correlated with the lower-status participants’ high aspirations. So, if you are on the lower-power side, help your client to identify high goals for the outcome and remind them of their aspirations throughout the process. Chinese, Singaporean, and American scholars found interesting evidence on how to do this. Using six different experiments, they found that priming negotiators to think about their own choices, as opposed to being at the mercy of others, correlated with positive outcomes. Similarly, when people thought about their counterparts’ choices, rather than constraints, they were more willing to persist in bargaining. Further, those who displayed a “choice mindset” achieved better outcomes. So, reminding yourself and your client of the available options and the power to decide between them can increase your negotiation results. Likewise, reminding your clients that their opponents also have decision-making power can help avoid an impasse.
How does power affect negotiation outcomes when there is discord within your constituency (e.g., the client’s business partners, insurance representatives, or family members)? Dutch scholars demonstrated that optimal outcomes correlated with a “dovish” majority and a “hawkish” minority, but only when the hawks had relatively low status. They found that results were diminished when the “hawkish” minority had high status or when the hawks outnumbered the doves. Bottom line: Be especially careful when the more aggressive members of your group are in the majority or exert disproportional influence.
Virtual (dis)connections. The increasing reliance on virtual mediation has created significant efficiency, but does it come with a downside? A growing body of research indicates that trust formation is more challenging to achieve in the teleconferencing environment. It is axiomatic that most of the information we perceive during a personal interaction comes through body language. While our brains adjust to a telephone conversation by realizing there is no visual stimulus to observe, watching for clues through a computer screen is problematic because our minds cannot pick up on all the gestures; this creates a cognitive dissonance that undermines trust formation. Research suggests that potential mitigating behaviors include taking extra breaks, reducing the image size, turning off your self-view, and staying visually connected with nonelectronic objects in your office (e.g., a plant or picture of a loved one) to reduce mental fatigue. Additional aids include making extra efforts to listen and rephrase what you have just heard to verify that messages were accurately received.
Negotiation Strategies That Strengthen Results
The research demonstrates that a successful negotiator does much more than start with a more extreme position and then gradually compromise. A team of international scholars performed multiple studies and concluded that optimal results are obtained when negotiators “set a clear target before they sit down at the negotiation table and continue to focus on it throughout the negotiation.” This focused approach allowed for a clear pattern of decreasing concessions, which reinforced the firmness of the reservation price and correlated to more advantageous outcomes. So, come with a specific plan and stick to a pattern of consistently decreasing the amount of your concessions.
Making the first offer. The evidence confirming the benefit of making the first offer is so well established that scientists refer to it as the “first mover advantage.” One study found that the initial offer created a powerful anchor and was a strong predictor of the result.
However, exceptions exist. There is data to indicate that, particularly in multi-issue bargaining, the advantage disappears if the offeror reveals information that indicates common interests on one or more issues. Similarly, the second mover can erase the edge when pointing out information that undermines the premise of the initial number. In the sales context, buyers with lower power are generally better off waiting for the seller to move first.
Phantom alternatives. What about the effect of a “phantom alternative,” i.e., a party’s subjective belief that they have a possible alternative deal? Assume that a defendant offers $3.6 million to settle a case. The plaintiff’s belief that, in the future, they can secure a judgment of $8 million is a phantom alternative because it is contingent on events over which they do not have complete control. By contrast, a pharmaceutical startup that has a firm offer for its intellectual property from Corporation A can go into negotiations with Corporation B knowing that its alternative is certain, i.e., not “phantom.”
A team of American scholars discovered that an illusory choice affected bargaining in profound ways. Negotiators with a phantom alternative performed about as well compared to those with concrete options. The reason appeared to be that the opponents of contingent possibility-holders tended to overestimate the utility of the unrealized option, leading them to achieve suboptimal results. These findings paralleled those from a London School of Economics study, which found that parties who lost their phantom alternative still did better than those who never had one. Thus, letting your opponent know of your client’s settlement options can be very beneficial, even if they are tenuous. Additionally, it is important to carefully analyze your opponents’ alternatives to ensure you are not overestimating their value.
Judgment: plaintiffs versus defendants. A group of American researchers conducted a series of experiments involving attorneys and students playing the roles of plaintiffs’ and defense lawyers to explore whether and how perspective, i.e., representing the plaintiff or the defendant, impacted settlement judgment. They found that those representing plaintiffs exhibited “over-optimism” in estimating verdicts, prompting them to unwisely proceed toward trial. Meanwhile, defense counsel tended to offer less than the cases’ expected outcome, suggesting they were prone to overlook obvious risks.
Those results were borne out by a group of attorneys who studied thousands of California trial results from over four decades and compared them with the final pretrial offers. They found that plaintiffs were two to three times more likely to make the wrong settlement choice (i.e., doing worse at trial than if they took their opponents’ last offer). At the same time, when the defendants miscalculated, the amount of error was about 10 times more than when the plaintiffs misjudged.
The study also concluded that the frequency and magnitude of errors were dramatically lower when the attorney was also a mediator, leading the authors to suggest that lawyers trained in dispute resolution are “more cognizant of framing biases [and] may have a salutary effect on attorney/litigant decision making.” The takeaway underscores the importance of creating ways to objectively analyze the other side’s position, such as focus groups, inviting input from unbiased colleagues, and engaging in mediation.
Transparency. Have you ever wondered if you inadvertently gave away your strategy for the negotiation or were frustrated that your opponent was not getting your message? According to professors at Cornell, Northwestern, and the University of Colorado, negotiators tend to underperform in terms of reading messages from the other side. Their studies reveal that even when people “tip their hand,” either intentionally or otherwise, the other side struggles to understand what the information means. Thus, if you fear that you carelessly gave away something, there is a good chance your opponent missed it. On the other hand, if you want to send a message, it may require being more explicit than you think.
How Emotion Impacts Negotiation
Mediation veterans have seen a lot of emotions and know how it can derail a deal. A Harvard Business Review article recounted how a dispute over a used washing machine nearly scuttled a $3 million sale of a Greenwich Village brownstone:
At the closing the sellers still refused to replace the machine. One of the buyers ripped up a seven-figure cashier’s check for the balance due, put a match to the scraps, and stomped out of the room. The sellers finally relented and agreed to reduce the price by $300. The brokers found the angry buyer at a nearby bar, nursing a drink. They coaxed him back and the deal was done.
So, how do we help our clients from letting their feelings sabotage their best interests, and how can we strategically employ (or not employ) emotive language during a negotiation?
Helping anxious clients. Nervous clients present a unique challenge as they are more likely to have lower expectations, make less ambitious first offers, and obtain worse outcomes. A Harvard researcher conducted several experiments and concluded that people with unease over an upcoming event, like public speaking, performed much better when they told themselves that they were “excited” (rather than anxious). So, when you see your clients indicating anxiety, reflect back that you notice they are “excited.” Additionally, as touched on above, involve your clients in crafting your strategic plan and emphasize their agency.
Anger. Do expressions of anger help or hurt? The multitude of scientific papers exploring this topic yields nuanced answers.
A team of researchers from the United States and Taiwan found that anger can be a signal that a party is getting desperate, which tends to prompt opponents to slow negotiations and accelerate outside information gathering, i.e., increased discovery. Thus, using anger as a bullying tool could result in your opponents’ expanding their search for weaknesses in your case.
Similarly, scholars from Rice and Northwestern Universities published data indicating that expressing anger with high intensity fails to elicit significant concessions and, not surprisingly, hinders long-term relationships. This correlates with evidence showing that faking anger to gain an advantage can create a spiral of diminishing trust that ultimately harms the misrepresenting party. Studies have found that expressing anger increases the chances of a complete breakdown in communications.
In another study, four American professors found that the response to the display of rage was reciprocated with a resulting decrease in trust. Even when an agreement was forged despite the emotionally charged environment, the rates of reneging were significantly elevated. Similarly, in multiparty negotiations, a party who expresses anger is more likely to be excluded from a deal. Thus, the short-term gains of expressing fury can be outweighed by the long-term costs.
There are, however, some papers that identified limited circumstances where anger expression could be helpful. As a preliminary matter, it is no surprise that expressing happiness at a counterpart’s offer yields fewer concessions than signaling frustration. Another study involving American, French, and Dutch scholars found that a party displaying unpredictability or a range of emotions during the negotiation positively correlated with extracting concessions from their opponent. In one of the more paradoxical studies on anger, business professors concluded that the effectiveness of anger is highly dependent on context; anger expressions are more effective when negotiators are in a cooperative environment (e.g., people starting a business together) than in a competitive situation (e.g., a legal dispute). The theory is that when there are highly developed personal relationships and/or the parties are involved in long-term ventures, “people tend to experience high levels of trust, benevolence, and the motivation to work together.” Put another way, expressing anger in a negotiation is often counterproductive, although an exception may exist if the bargaining is in the context of a strong relationship and it is not expressed destructively. Additionally, the relative power of the parties affects how feelings are experienced. The emotional expression of the higher-power negotiator is more likely to be impactful on their lower-power counterpart and may exceed the impact of the lower-power participant’s own emotions.
Will a “strategic flinch”—an expression of disgust to a particular offer, e.g., “Your offer is insulting!”—help your side? Simulated negotiations involving 222 full-time Canadian MBA students paralleled the research on anger; they found that a strategic flinch that is genuine and does not include intense rage correlated with effectiveness in bargaining. Put another way, communicating surprise or outrage without fury could be helpful in soliciting concessions.
Taken together, the information suggests that displays of intense anger and faking rage are likely to backfire. While expressing a range of heartfelt emotions can be beneficial in limited circumstances, there are significant risks.
Ambivalence. The results on the effects of ambivalence are, well, ambivalent. There is evidence that expressing uncertainty in the context of bargaining correlates with higher joint outcomes. However, a University of Illinois study found that ambivalence conveys submissiveness, which undermines negotiation effectiveness. Thus, there is no clear guidance, but, extrapolating the data from anger, there appears to be a productive role for expressing heartfelt feelings.
Pride. In one of the most granular studies on how emotions affect bargaining, MIT and Virginia Tech professors studied the effects of anger and pride as well as past performance in the context of serial negotiations. Their research is unique in that they tested their theories in both simulated (i.e., having students play a role in a mock negotiation, but with incentives for performance) and actual (i.e., observing actual transportation company employees negotiate fuel prices with a supplier) environments. The study included almost a thousand separate negotiations. After each round, the participants recorded their feelings, e.g., anger, resentfulness, pride, etc., as well as their overall satisfaction with the process. The researchers’ theory that anger would negatively affect subsequent performance was not supported.
However, experiencing pride in one session had a negative effect on subsequent negotiation performance, especially among men. Similarly, there was a negative correlation between someone’s overall subjective evaluation of their performance and how they did in the next session. This indicates that pride has an undermining effect on bargaining success. Because the results of the field interactions mirrored the ones in the lab, there is evidence that expert negotiators are not immune to pride’s negative effects. Letting time elapse after a successful negotiation can mitigate pride’s negative effect.
Conclusion
Whether we are negotiating directly or participating in mediation, the nuances of our numbers, words, plans, and expressions can have a powerful impact on the outcome. Scientific research on bargaining offers a wealth of practical insights into how we gain the upper hand and prevent being manipulated. By employing these science-based best practices, we can experience confidence that we have fulfilled our duty to produce the best possible results for our clients.
