Dealing With The Challenge Of Cognitive Bias

What we want to do is to create value at the bargaining table
What we want to do is to create value at the bargaining table
Image Credit: Ron Mader

Let’s face it – no matter how highly we may think of ourselves, none of us are perfect. What this means is that every time that we enter into a negotiation, we arrive with our own set of personal cognitive biases. We have experience with this negotiating stuff and so it’s natural that we may tend to rely on our intuition when it comes time to make decisions. There is no question that this may be the right thing to do sometimes; however, it’s the wrong thing to do at other times. How can we limit our use of cognitive bias during our next negotiation?

The Problem With Bias

Negotiators know about the psychological biases that affect negotiators, many of which spring from a reliance on our intuition, and which may hinder our integrative negotiations. Of course, negotiators are not always affected by bias; sometimes we think systematically and clearly at the bargaining table. Most negotiators believe we are capable of distinguishing between situations in which we can safely rely on intuition from those that require more careful thought. However, it turns out that often we are wrong.

In fact, all too often most of us trust our intuition more than evidence suggests that we should. To explain why negotiators don’t always think rationally or logically, researchers have distinguished between what they call System 1 and System 2 types of thought. System 1 type thought describes our intuition: quick, automatic, effortless, and influenced by emotion. By comparison, System 2 type thought is slower, more conscious, effortful and logical. When you are carefully considering your options, you are using System 2 thinking. When you are simply acting on your intuition, you are using System 1 thinking. pretty sure that we can all think of instances in which we acted rashly, relying on System 1 thoughts and emotions, as well as times when we carefully evaluated a situation using System 2 logic.

Unfortunately, most people – especially busy negotiators – fall back on System 1 thinking during their negotiations. Reliance on our intuition increases when a situation is complex and negotiators reach a state of what is called “cognitive overload”. At such times, our ability to process information is pushed to the limit and we naturally shift away from complex System 2 thought toward simpler System 1 thought. It is understood that a complete System 2 thought process is not necessary for every managerial decision or for every small negotiation you may be facing. When you’re negotiating with your coworkers over where to go for lunch, when you’re setting deadlines for low-priority tasks, or when you’re informally discussing items that you plan to revisit later in more detail, System 1 thought will be sufficient. Taking the time to logically reason through every decision can be costly, even leading to decision paralysis. However, negotiators are encouraged to engage in System 2 thought during our most important negotiations.

How To Prevent Falling Back On Your Intuition During A Negotiation

If you want to find ways to prevent yourself from falling back on your intuition during an integrative negotiation, then the first thing that you will need to do is to make a System 2 list. Negotiators need to understand that the first step in negotiating more rationally is to identify real-life negotiation situations that call for extra vigilance. Periodically, perhaps as often as once per month, make a list of important upcoming negotiations that you think might require System 2 thought. Such negotiations could concern lots of money, complex issues, multiple parties, key strategic partners, or a new direction for your firm.

When you take the time to carefully prepare for particular negotiations, you are setting yourself up to engage in System 2 thought in situations where it is required. You also should schedule negotiations in a way to best engage in System 2 thinking. If you’re a night owl, then you should avoid meeting with an important client first thing in the morning. In addition, this strategy will remind you to actively participate in any necessary pre-negotiation discussions that could affect your agenda.

Negotiators also have to be careful to not let time pressure affect your decisions. As noted, intuitive System 1 thought often takes over when negotiators are under intense time pressure. Awareness of this tendency can lead you to make key adjustments to your negotiations. Instead of scheduling to negotiate a deal over a short lunch, instead set aside an entire morning keeping in mind that you’ve already decided that these talks are important. If someone catches you off guard and launches into discussions on the fly, you can ask them to reschedule the conversation for a later time or date.

We all know that real estate agents and other intermediaries are famous for “forcing” people to negotiate, make commitments, or respond to requests under immense time pressure. Too often people fall prey to this tactic, for fear of losing the deal or offending the other party. It turns out that, in most cases, there is little reason you should feel guilty about postponing your negotiation or decision. Unless someone has given you specific, credible information that time truly is of the essence, you need to avoid succumbing to others pressure tactics.

In order to avoid relying too much on your intuition you need to partition the negotiations across multiple sessions. We all understand that human beings have a natural desire for achieving closure. As a result, most of us seek to reach an agreement or settlement as quickly as possible during a negotiation. But we need to keep in mind that completing an entire negotiation in one session is typically unnecessary – oh, and in fact, sometimes it’s impossible. Even when you show up well prepared, a negotiation that is the slightest bit complex will raise new information, unforeseen issues, and tactics that you did not anticipate. Remember that in negotiation, patience often generates significant dividends.

What All Of This Means For You

Taken together, these strategies should help you identify when to incorporate careful, reasoned analysis into your next negotiation. These recommendations may run counter to the implicit trust and confidence that many of us have in our own intuition. However, the data is very clear: with the use of intuition comes the potential for significant psychological biases that lead to irrationality. By accepting these strategies, you can learn to overcome bias and think more rationally during your next negotiation.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How can you detect when you have started to rely on your intuition during a negotiation?

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What We’ll Be Talking About Next Time

All negotiators would like to become better. The challenge that we are all facing is that we don’t know how to go about doing this. Sure, we can go to courses, we can talk with other negotiators, and we can collect statistics on how our negotiations go. However, if we really want to become better negotiators what do we need to be doing? Interestingly enough, the answer may be simpler than any of us realized. What negotiators need to do is to get good at giving and getting feedback.