1. CHAPTER FIVE Perception, Cognition and Communication

2. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-2 Perception and Negotiation  The role of perception  Perception distortion in negotiation  Framing

3. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-3 The Role of Perception  Perception: The process by which individuals connect to their environment –People interpret their environment in order to respond appropriately –The complexity of environments makes it impossible to process all of the information –As a result people develop shortcuts to process information –These shortcuts create perceptual errors

4. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-4 Perception Distortion in Negotiation  Four major perceptual errors: –Stereotyping –Halo effects –Selective perception –Projection

5. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-5 Stereotyping & Halo Effects  Stereotyping: An individual assigns attributes to another solely on the basis of the other’s membership in a particular social or demographic group –“Old people are conservative; this person is old and therefore is conservative”  Halo Effects: An individual generalizes about a variety of attributes based on the knowledge of one attribute of an individual –“He is smiling therefore he is also honest”

6. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-6 Selective Perception & Projection  Selective Perception: The perceiver singles out information that supports a prior belief but filters out contrary information –The person who thinks “He is smiling therefore he is also honest” ignores behavior indicating the other party’s aggressiveness  Projection: People ascribe to others the characteristics that they possess themselves –“I am honest therefore she is honest also”

7. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-7 Framing  Frames: –The subjective mechanism through which people evaluate and make sense out of situations –Lead people to pursue or avoid subsequent actions  About focusing, shaping and organizing the world around us  Making sense of complex realities  Defining realities in ways that are meaningful to us

8. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-8 Cognitive Biases in Negotiation  Negotiators have a tendency to make systematic errors when they process information. These cognitive biases, impede negotiator performance; they include: –Irrational Escalation of Commitment –Mythical Fixed-Pie Beliefs –Anchoring and Adjustment –Framing –Availability of Information –Winners Curse –Overconfidence –The Law of Small Numbers –Self-Serving Biases –Endowment Effect –Ignoring Other’s Cognitions –Reactive Devaluation

9. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-9 Irrational Escalation of Commitment & Mythical Fixed-Pie Beliefs  Irrational Escalation of Commitment –Negotiators maintain commitment to a course of action even when that commitment constitutes irrational behavior  Mythical Fixed-Pie Beliefs –Negotiators assume that all negotiations (not just some) involve a fixed pie

10. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-10 Anchoring and Adjustment & Framing  Anchoring and Adjustment –The effect of the standard (anchor) against which subsequent adjustments (gains or losses) are measured –The anchor might be based on faulty or incomplete information, thus be misleading  Framing –Frames can lead people to seek, avoid, or be neutral about risk in decision making and negotiation

11. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-11 Availability of Information & The Winners Curse  Availability of Information –Operates when information that is presented in vivid or attention-getting ways becomes easy to recall. –Becomes central and critical in evaluating events and options  The Winners Curse –The tendency to settle quickly on an item and then subsequently feel discomfort about a win that comes too easily

12. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-12 Overconfidence & The Law of Small Numbers  Overconfidence –The tendency of negotiators to believe that their ability to be correct or accurate is greater than is actually true  The Law of Small Numbers –The tendency of people to draw conclusions from small sample sizes –The smaller sample, the greater the possibility that past lessons will be erroneously used to infer what will happen in the future

13. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-13 Self-Serving Biases & Endowment Effect  Self-Serving Biases –People often explain another person’s behavior by making attributions, either to the person or to the situation –The tendency is to:  Overestimate the role of personal or internal factors  Underestimate the role of situational or external factors  Endowment Effect –The tendency to overvalue something you own or believe you possess

14. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-14 Ignoring Other’s Cognitions & Reactive Devaluation  Ignoring Other’s Cognitions –Negotiators don’t bother to ask about the other party’s perceptions and thoughts –This leaves them to work with incomplete information, and thus produces faulty results  Reactive Devaluation –The process of devaluing the other party’s concessions simply because the other party made them

15. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-15 Managing Misperceptions and Cognitive Biases in Negotiation The best advice is:  Be aware of the negative aspects of these effects  Discuss them in a structured manner within their team and with their counterparts

16. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-16 What is Communicated During Negotiation?  Offers and counteroffers  Information about alternatives  Information about outcomes  Social accounts –Explanations of mitigating circumstances –Explanations of exonerating circumstances –Reframing explanations  Communication about the negotiation process

17. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-17 How People Communicate in Negotiation  Use of Language –Logical level (proposals, offers) –Pragmatic level (semantics, syntax, style)  Selection of a Communication Channel –Social presence is key variation that distinguishes one channel from another –Social presence is the ability of a channel to carry and convey subtle social cues from sender to receiver –It goes beyond the literal “text” of the message itself

18. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-18 How to Improve Communication in Negotiation  The Use of Questions –Manageable  Cause attention or prepare the other person’s thinking for: –Further questions –Getting information –Generating thoughts –Unmanageable  Cause difficulty, give information and bring the discussion to a false conclusion

19. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-19 How to Improve Communication in Negotiation (cont.)  Listening: Three major forms –Passive listening  No feedback to the sender –Acknowledgment:  Receivers nod their heads, maintain eye contact, or interject responses –Active listening:  Receivers restate or paraphrase the sender’s message in their own language

20. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-20 How to Improve Communication in Negotiation (cont.)  Using active listening encourages people to speak more fully about their: –Feelings –Priorities –Frames of reference –Positions

21. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-21 How to Improve Communication in Negotiation (cont.)  Role Reversal –Allows negotiators to understand the other party’s positions by actively arguing these positions

22. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-22 Mood, Emotion and Negotiation  Negotiations Create Both Positive and Negative Emotions  Positive Emotions Generally Have Positive Consequences for Negotiations –They are more likely to lead the parties toward more integrative processes –They promote persistence

23. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-23 Mood, Emotion and Negotiation  Positive Emotions Generally Have Positive Consequences for Negotiations (cont.) –They result from fair procedures during negotiation  Negotiators in a positive mood may be less likely to examine closely the arguments put forward by the other party

24. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-24 Mood, Emotion and Negotiation  Negative Emotions Generally Have Negative Consequences for Negotiations –They may lead parties to define the situation as competitive or distributive –They may lead parties to escalate the conflict –They may lead parties to use retaliatory behavior and obtain poorer outcomes

25. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 5-25 Mood, Emotion and Negotiation  Negative Emotions Generally Have Negative Consequences for Negotiations (cont.) –They may result from impasse  Anger can serve as a danger signal that motivates both parties to confront the problem directly and search for a resolution  Emotions Can Be Used Strategically As Negotiation Tactics