Making Negotiations Predictable: What Science Tells Us? PDF
Preview Making Negotiations Predictable: What Science Tells Us?
MAKING NEGOTIATIONS PREDICTABLE This page intentionally left blank MAKING NEGOTIATIONS PREDICTABLE What Science Tells Us? David De Cremer ChinaEuropeInternationalBusinessSchool(CEIBS),China and Madan M. Pillutla LondonBusinessSchool(LBS),UK ©DavidDeCremerandMadanM.Pillutla2012 Softcover reprint of the hardcover 1st edition 2012 978-1-137-02478-7 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noportionofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency, SaffronHouse,6–10KirbyStreet,LondonEC1N8TS. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorshaveassertedtheirrightstobeidentifiedastheauthorsofthis workinaccordancewiththeCopyright,DesignsandPatentsAct1988. Firstpublished2012by PALGRAVEMACMILLAN PalgraveMacmillanintheUKisanimprintofMacmillanPublishersLimited, registeredinEngland,companynumber785998,ofHoundmills,Basingstoke, HampshireRG216XS. PalgraveMacmillanintheUSisadivisionofStMartin’sPressLLC, 175FifthAvenue,NewYork,NY10010. PalgraveMacmillanistheglobalacademicimprintoftheabovecompanies andhascompaniesandrepresentativesthroughouttheworld. Palgrave®andMacmillan®areregisteredtrademarksintheUnitedStates, theUnitedKingdom,Europeandothercountries. ISBN 978-1-349-43865-5 ISBN 978-1-137-02479-4 (eBook) DOI 10.1057/9781137024794 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources.Logging,pulpingandmanufacturing processesareexpectedtoconformtotheenvironmentalregulationsofthe countryoforigin. AcataloguerecordforthisbookisavailablefromtheBritishLibrary. AcatalogrecordforthisbookisavailablefromtheLibraryofCongress. 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 16 15 14 13 12 CONTENTS Chapter 1 Introduction 1 Chapter 2 Negotiation Basics: Structure and Process 13 Chapter 3 Cognitive Errors of Negotiators 40 Chapter 4 Emotions and Intuition 66 Chapter 5 The Impact of Framing on Negotiations 81 Chapter 6 Trust and Distrust 101 Chapter 7 Power 118 Chapter 8 Fairness 136 Chapter 9 The ‘Moving Forward to Agreements’ Survey 144 References 155 Biography 167 Index 169 v CHAPTER 1 INTRODUCTION Most people are familiar with the term ‘negotiations’. The word is so often used in the media nowadays that it is almost impossible to avoid it. Newspapers and television cover many negotiations ranging from dis- cussions about the responsibilities of each country for solving problems arising out of the financial crisis of 2008, to the necessary budget cuts within countries, to footballers and their agents negotiating contrac- tual terms with teams. These examples, which come to mind when the term is introduced, obscure the fact that negotiations are not confined exclusively to financial matters or to the business world. Our lives are made up of a succession of dif- ferent negotiations – trying to get our children to do household chores, convincing our partners about whom we should invite to dinner, collaborating with a colleague on a project, and so on. These inter- actions, while not explicitly negotiations, deal with promises which have been made, emotions that have been experienced, and the rights and responsibilities attached to different people, and should therefore be considered to be negotiations. Viewed from this per- spective,itisclearthatevenasimpledecision,suchas deciding whether or not to shake somebody’s hand, is an act of negotiation. This is the position that we take in this book. 1 MAKING NEGOTIATIONS PREDICTABLE Negotiationsarethereforenotsolelyamatterforthe professionals. It is something that we all deal with. Negotiation is an important part of our social interac- tion with others, not only in our professional lives, but also in our private lives. We humans are social creatures. The relationships we develop with other people in the course of our lives have an important influence on how we feel, think, and act. Most of these relationships are given shape and form through a process of mutual coordination – this type of coor- dination is closely linked to the art of negotiation. Negotiation is the process by which two or more parties seek to approach a situation of potential conflict in a positive and constructive manner and reach an agreement which is acceptable to all sides. This description implies that negotiation – almost by definition – is focused on outcomes that you would not have been able to get on your own. The purpose of a negotiation is therefore to achieve a better out- come for all concerned than would otherwise have been possible without the negotiating process. Con- sequently negotiation is not a matter of ‘winning’, but rather a matter of reaching an agreement that is acceptable to all parties. Even though negotiations are ideally a method to achieve constructive and positive results, it is not always easy to get all the relevant partners around the negotiating table, especially if there is no immediate problem. The first problem therefore is in getting peo- ple to realize the need for negotiations. If people do realize the need, it is often when there is conflict or a difference of opinion. The ability to overcome ini- tial reservations and suspicions then becomes the first stepinthenegotiationprocess.Thesereservationsand suspicions often colour discussions, leading to a lack 2 INTRODUCTION ofagreementeveninsituationswhereeveryoneisbet- ter off with one. Surely common sense should prevail so that agreement is reached quickly. That goes with- outsaying,doesn’tit?Bytheirverypresenceeveryone has indicated their willingness to negotiate, so is not the formal conclusion of the discussions just a matter of time? What could possibly go wrong? Unfortunately things do not always work out this way. It is during the phase when discussions actu- ally take place that the potential intractability of the situationoftenbecomesmostevident.Whenthishap- pens the negotiations suddenly appear to be much more than a question of taking the time and mak- ing the effort to get the different parties around the negotiating table. While negotiations contain strong formal elements, which need to be followed up to structure efficient agreements, the rational approach isnotsufficienttoguaranteegoodoutcomes.Theidea thatarationalapproachonthepartofthenegotiating partners will quickly and automatically lead to clarity and an optimal solution has been shown to be a fal- lacy in practice. All too often, negotiations cannot be confined to rational and predictable procedures. They often lead to suboptimal solutions or even stalemates, from which no way out seems immediately possible. Dozens of recent national and international exam- ples of failed negotiations can be cited to support this claim. Take, for example, the issue of the sovereignty of the Falkland Islands. Argentina would like Great Britain to enter into talks to resolve what they see as the dispute over the sovereignty of the islands. Great Britain, on the other hand, sees no dispute. In early 2010 Hillary Clinton, the Secretary of State of the United States, decided to endorse Argentina’s 3 MAKING NEGOTIATIONS PREDICTABLE call for negotiations. In June of that same year the United States went a step further. It joined the Organ- isation of American States (OAS) in a unanimously passed voice vote resolution calling for negotiations between London and Buenos Aires. It was no surprise that this call was completely unacceptable to Great Britain. The fact that the resolution referred to the ‘Malvinas’ Islands, and not the Falkland Islands, its official, internationally recognized name, was a fur- ther insult. The British government issued a formal complaint over the use of the name ‘Malvinas’ at an official press conference. London also believed that it had been let down by its close partner America with whom it had a ‘special relationship’. If the US com- mitment to this special relationship is sincere, then it should be clear to Washington that the backing they provided for negotiations is deeply unhelpful and unwelcome. At other times, negotiations stall because of a mis- understanding between parties about the strength of the other side. The 2011 budget negotiations between the Obama-led White House and the Republicans offered an excellent example of such a misunder- standing. In the United States most Democrats think (probably correctly) that Republicans use tough nego- tiation tactics. For that reason many Democrats think that the use of an overly cautious negotiation style will not work. If you use such a style, you will get eaten by the other party. Unfortunately in the eyes of manyDemocratsandevenofindependents,President Obama engaged in using such a cautious style during thebudgetnegotiations.Manyofthemweresurprised to find out that their bottom line with respect to the debt ceiling was much different from the one being laid out by the president leading their charge. 4
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