In this video i'd like to talk to you
about what are cognitive
biases in negotiations. Now
at its very basis of bias is simply
our predisposition towards
something we that is we have an outside
outsized effect based upon
some external factor prior information
prior
knowledge our mental disposition coming
into the negotiation
the mental frame that we're using any of
these things
cause us to have a predisposition
towards something right
and the bias itself means that we can't
process
the information that we come in contact
with accurately
because of this prior influence or this
outsized effect that this influence has
on our
ability to cognitively process
information okay.
And cognitive biases are generally
subconscious we don't
realize that they are affecting our way
of thinking or
or our thought process okay.
So with that being said i think it's
important that i give you some examples
of common cognitive biases to help you
understand what it is.
So to start with in a negotiation it is
common to see a
false or erroneous fixed pi assumption
that is
the negotiators automatically default
towards a haggling style
or competitive approach to the
negotiation because they believe
that the interests at stake are
distributive in nature
and that is they're fixed they cannot be
the total value cannot be expanded
through
integrative approaches so it leads to a
competitive
approach in the negotiation uh that is
you're trying to grab more value
than the other side rather than
cooperatively uh
create value for both parties so an
erroneous fixed pie right you believe
it's distributive but
it's potentially not okay. False conflict
you see this often times as a negative
result as a
result of compatible interest that is
people have similar or the same interest
but you perceive that there is a
conflict there
so ultimately parties commonly settle on
an outcome that is worse for both of
them
than they otherwise could have achieved
simply because they perceive
there to be um a conflict of interest or
that the desired outcomes of the parties
are some way differing
okay when that is not true all right. An
irrational escalation of commitment
that is when you uh exert
an irrational amount of effort
time and sometimes
focus too much on a specific course of
action
rather than changing course of actions
right that is
you recognize that there could be
advantages to a different course of
action
but nonetheless you double down on a
specific course of action
even though the rational decision would
be to
uh prefer the other course of action or
the other option
it's closely related to concepts of sump
cost right you don't want to forego all
you've put
into going through this process or going
down this road in the negotiation so you
continue down that road because
you don't want to make everything that
you've done
less valuable or worthless in the
negotiation right so it's irrational
that you follow
this path of road in in the negotiation
okay.
Another common bias is overconfidence
now confidence is good in a negotiation
right
in terms of motivation right in terms of
mental disposition
in terms of communication and how others
perceive you but over confidence can
cause you
to ignore elements of the negotiation
right
that is you believe that you have the
ability to
affect the negotiation more than you
actually can
right that is so as a result of that
oftentimes
you ignore the nor other aspects of the
negotiation that could be valuable to
you
that you should comprehend or take into
consideration
as part of your decision making or the
actions that you take okay so that's the
overconfidence
bias. Egocentrism and that that is a
tunnel vision as you'll say a focus on
yourself and your
own interests in the negotiation right
um so you're unable to empathize with
the uh outside party
the other person you're unable to
recognize their point of view
and thereby you know understand and
collaborate
or come up with ways that meets their
needs as well as yours so it's a very
much a blockade to
getting to an integrative situation in a
negotiation
all right. Self-serving bias
this is where we tend to look for
information
that is more beneficial to us right
but most notably it is a tendency for us
to attribute aspects
of our behavior in a negotiation to the
context
right we we acted this way because of
the context of the negotiation
but we attribute aspects of
the other party's behavior to their
personality
right so we are biased towards a
self-serving
or self-focused tendency in this regard
and again we look for information that
once again serves our interest
and focus more heavily on that than the
act all the actual
interest at stake in the all of the
information are relevant to the
negotiation
okay. An issue issue framing bias
in prior videos we talked about
mental frames and how you come into the
negotiation and basically it's a
framework by which you perceive
information by which you come into
contact with external
information and then take that to
process it
mentally right. So to the extent that you
come in with a prior frame right that
get that leads to some predisposition
right some mental model that you're
bringing into the negotiation along with
it
it's a bias right because once again it
causes you to
exclude other information that doesn't
fit neatly within the frame
that you're employing okay. Information
availability bias okay that is our
tendency to focus on first the
information available
right or the most readily uh available
information as being the most important
when oftentimes it's not oftentimes
there's a deeper level of information
there that you should search out
and seek to interpret and also how the
information is presented to us so
more vivid more colorful more flamboyant
uh the information the more impactful as
it hits you
right the more import we put on it. But
oftentimes
that is not the most important
information marketing depends heavily
upon our information availability bias
in making decisions right
that's why oftentimes commercials or
advertisements are what they are
right it's how the information hits you
as opposed to a true assessment of what
information is most important.
Winner's curse that's our tendency to
once again not grab
enough value or perceive that we didn't
grab enough value in the negotiation
because
the other side accepted our offer or our
position too quickly
we believe we left value on the table
whether that's true or not
um once again it is our uh tendency to
once again perceive that that if
something is accepted too quickly
that um that value was left
on the table okaY. Endowment effect
that is our tendency
to uh if we have it in our possession
and we believe it's ours we perceive
that we own it or
we've already accomplished something we
will work or fight harder
to not lose it than we will to obtain it
in the first place right
we over value what we have or we put too
much emphasis or value on what we have
because we already have it right
um so again it can be a distortion as to
how much effort you should put into any
course of actions in terms
of maintaining that interest. And then
lastly, reactive devaluation that is our
tendency to simply think that the other
side's the villain
the other side's the competition if they
propose a course of
action then that course of action
must not be in our best interest okay
so with that being said we should once
again
devalue or look at anything that they
offer as
skeptical right because once again
it came from our enemy or the
competition. So these are some common
cognitive biases and these are examples.
So one is useful to understand
these tendencies because once again
understanding biases is the first step
to
mitigating their effect but once again
these various biases show you how
once again there are frames out there
there are there are predispositions that
cause us
an inability to accurately process
information in a negotiation.