Table Of ContentMAKING NEGOTIATIONS
PREDICTABLE
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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
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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.
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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
