Negotiators Bias - Negotiation Essay Example
Each person views themselves in a way that may not be 100% accurate. Negotiators bias occurs when a person sees themselves negotiating in a fair or ethical way when in fact they are not. Framing is reoccurring theme throughout the article and in some cases can work hand in hand with negotiators making a sale. Negotiators bias and framing are two important points covered in our reading.
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A negotiators bias occurs when a negotiator has unreasonable judgment during a negotiation. The first example of negotiators bias occurs with Lorenzo the CEO of Eastern Airlines. Lorenzo believed he had a great idea to save the company money which included reissuing employees’ contracts to reduce labor costs. Lorenzo actually went as far as trying to break up the labor union which resulted in a one million dollar loss in one business day. At this point one would hope for the best and hope to see Lorenzo change his marketing strategy. But this did not happen. Eastern Airlines became bankrupt and Lorenzo was in charged of negotiating the sale. He refused to sell to another airline so instead begin negotiations with Pete Ueberroth, the former commission of baseball. Negotiations with Pete went well and they agreed on a selling price and even shook hands. Lorenzo took an unethical route and increased the buying price by forty million dollars after this. Ueberroth pulled out of the deal. Lorenzo’s bias did not dissolve even with the loss of Ueberroth’s deal. He continued to lose deals for the company until finally a bankruptcy judge ordered a court appointed trustee to make decisions for the company.
The concept of framing is very interesting, yet very accurate at the same time. Framing is a great way for negotiators to set a scene and make a sale. The first example describes a customer about to purchase a $70 watch. Although the watch is not very expensive they jump at the opportunity to save almost half, $30, by walking two blocks to another store. In this case the purchaser is willing to make a move and save some money. In a very similar scenario a customer is about to make a very expensive purchase for $800. The same thing happens and a friend comes to say they saw they same camera on sale for $30 less two blocks away. The savings seem significantly less as $30 is a very small amount when you are spending $800. This exercise shows that most people would jump at the opportunity to save $30 when they are not spending very much money. But when the same consumer is spending a great deal more $30 then seems like an insignificant amount of money. Framing has a lot to do with the way a purchaser is biased. A negotiator can often use framing to their advantage if they are willing and able to paint the right picture.
Framing is also a great route for negotiators to take if their customer is willing to take a risk. Negotiators or sales people must be able to recognize signs that a person is a willing risk taker. Risk assessment is a judgment of the amount of risk people are willing to take. Consumers can generally be categorized as risk adverse or risk seeking. Risk seeking people will generally risk more to gain more. In the article risk seekers are aggressively willing to take risks. Risk adverse people are intimidated and may only take a risk if there is a payoff. Negotiators need to be aware that “people are risk-averse when confronting potential gains and risk seeking when confronting potential losses”. It is important to note that each situation needs to be evaluated differently. Because a person is risk seeking in one part of his/her life does not mean they are constantly risk seek. They may be risk adverse about some areas. When framing negotiators must keep in mind that “to negotiate rationally, you must remember that the way in which a problem is framed or presented can dramatically alter how you perceive the value or acceptability of your alternatives”.
Framing seems to be a trend that is consistent across the board with negotiation. Take the example of a cars salesman selling a warranty to a new car owner. It is noted that almost all new car owners buy these warranties. The seller pushes these warranties and reminds customers that all cars need repairs. They set up the sale through framing reminding the customer of large repair bills they may have had in the past. For the most part the customer generally accepts this and says yes I will pay a few more dollars a month for such a great deal. The sales man in this instance is biased because he knows the warranty he is selling is money going into his pocket. Most customers never use this warranty because the new car is covered by a manufacturer’s warranty. In this instance the car dealer know he is being wheeling and dealing, selling something that is not going to benefit the customer but is going to benefit his pocket. But at the end of the day this can be justified to the salesman because he just might believe he is selling something worthwhile.
Negotiators bias is a concept that is ongoing when someone sees something they want but are unwilling to budge to make the negotiation work. A negotiator wants to make the best deal possible and benefit from each negotiation but they need to be willing to accept the terms of the agreement and be as honest as possible.