Inside a deal
May 1st 2008
From The Economist print edition
It pays to get inside your opponents' heads rather than their hearts
JUDGED by the number of times that negotiations are said to have ended in a “win-win situation”, striking a successful deal might seem easy. There are, after all, shelves full of books offering advice about how to succeed as a negotiator.
The main tip is to gain bargaining power by understanding the person on the other side of the table. But what exactly does a negotiator need to know about his antagonist? In a series of experiments a team of researchers have come up with some intriguing answers in a report just published in Psychological Science.
Adam Galinsky of Kellogg School of Management at Northwestern University, Illinois, and his colleagues looked at two related approaches often used to understand the opponent in negotiations: perspective-taking and empathy. Although the terms are often used interchangeably, they are different. Perspective-taking is the cognitive power to consider the world from someone else's viewpoint, whereas empathy is the power to connect with them emotionally.
They conducted a series of experiments using more than 150 MBA students who had just enrolled on a ten-week course on negotiations—so they were novices. The students were divided into pairs. One played the part of the seller of a petrol station and the other the buyer. They were told to strike a deal, but this could not be done on price alone, because the maximum the buyer was allowed to pay was lower than the seller's reserve price. So only a creative deal would work (made possible because the seller needed to finance a sailing trip but would later want a job, and the buyer needed to hire managers to run the petrol station). Just over two-thirds of the pairs managed to reach a deal. Analysis showed that when the buyer in particular had a perspective-taking ability it could predict a successful outcome.
The experiment was then re-run, with the pairs split into three groups. In the perspective-taking group the buyers were told to try to understand what the petrol-station owner was thinking and what his interest and purpose was in selling. The empathy group was told to understand what the seller was feeling and what emotions he might be experiencing. The third group was a control; the buyers were told simply to concentrate on their own role. Again, it was the pair with a perspective-taking buyer who were more likely to strike a deal (76%) than the empathisers (54%), followed by the control group (39%).
In a third and different experiment, lots of issues had to be negotiated and trade-offs made, with one student playing the role of a job candidate and the other a recruiter (with the recruiters randomly assigned as perspective-takers, empathisers or a control). In terms of a joint gain, 40% of the pairs with a perspective-taking recruiter scored maximum points; 22% of the empathisers did and 12% of the control group. However, in terms of an individual gain, the perspective-taking recruiters did far better—pushing the empathetic recruiters into last place.
What this shows is that even with one negotiator having perspective-taking abilities it can produce a better overall outcome for both sides. “You want to understand what the other side's interests are, but you do not want to sacrifice your own interests,” says Dr Galinksy. “A large amount of empathy can actually impair the ability of people to reach a creative deal.”