International Business Negotiation McGraw-Hill/Irwin

Perception, Cognition, and Emotion CHAPTER FIVE Perception, Cognition, and Emotion

Perception, Cognition, and Emotion in Negotiation The basic building blocks of all social encounters are: Perception Cognition Framing Cognitive biases Emotion 5-3

Perception Perception is: The process by which individuals connect to their environment. A complex physical and psychological process A “sense-making” process 5-4

The Process of Perception The process of ascribing meaning to messages and events is strongly influenced by the perceiver’s current state of mind, role, and comprehension of earlier communications People interpret their environment in order to respond appropriately The complexity of environments makes it impossible to process all of the information People develop shortcuts to process information and these shortcuts create perceptual errors 5-5

Perceptual Distortion Four major perceptual errors: Stereotyping Halo effects Selective perception Projection 5-6

Stereotyping and Halo Effects Is a very common distortion Occurs when an individual assigns attributes to another solely on the basis of the other’s membership in a particular social or demographic category Halo effects: Are similar to stereotypes Occur when an individual generalizes about a variety of attributes based on the knowledge of one attribute of an individual 5-7

Selective Perception and Projection Perpetuates stereotypes or halo effects The perceiver singles out information that supports a prior belief but filters out contrary information Projection: Arises out of a need to protect one’s own self-concept People assign to others the characteristics or feelings that they possess themselves 5-8

Framing Frames: Represent the subjective mechanism through which people evaluate and make sense out of situations Lead people to pursue or avoid subsequent actions Focus, shape and organize the world around us Make sense of complex realities Define a person, event or process Impart meaning and significance 5-9

Types of Frames Substantive Outcome Aspiration Process Identity Characterization Loss-Gain 5-10

How Frames Work in Negotiation Negotiators can use more than one frame Mismatches in frames between parties are sources of conflict Particular types of frames may lead to particular types of arguments Specific frames may be likely to be used with certain types of issues Parties are likely to assume a particular frame because of various factors 5-11

Interests, Rights, and Power Parties in conflict use one of three frames: Interests: people talk about their “positions” but often what is at stake is their underlying interests Rights: people may be concerned about who is “right” – that is, who has legitimacy, who is correct, and what is fair Power: people may wish to resolve a conflict on the basis of who is stronger 5-12

The Frame of an Issue Changes as the Negotiation Evolves Negotiators tend to argue for stock issues or concerns that are raised every time the parties negotiate Each party attempts to make the best possible case for his or her preferred position or perspective Frames may define major shifts and transitions in a complex overall negotiation Multiple agenda items operate to shape issue development 5-13

Some Advice about Problem Framing for Negotiators Frames shape what the parties define as the key issues and how they talk about them Both parties have frames Frames are controllable, at least to some degree Conversations change and transform frames in ways negotiators may not be able to predict but may be able to control Certain frames are more likely than others to lead to certain types of processes and outcomes 5-14

Cognitive Biases in Negotiation Negotiators have a tendency to make systematic errors when they process information. These errors, collectively labeled cognitive biases, tend to impede negotiator performance. 5-15

Cognitive Biases Irrational escalation of commitment Mythical fixed-pie beliefs Anchoring and adjustment Issue framing and risk Availability of information The winner’s curse Overconfidence The law of small numbers Self-serving biases Endowment effect Ignoring others’ cognitions Reactive devaluation 5-16

Irrational Escalation of Commitment and Mythical Fixed-Pie Beliefs 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 5-17

Anchoring and Adjustment and Issue Framing and Risk 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 Issue framing and risk Frames can lead people to seek, avoid, or be neutral about risk in decision making and negotiation 5-18

Availability of Information and the Winner’s Curse 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 winner’s curse The tendency to settle quickly on an item and then subsequently feel discomfort about a win that comes too easily 5-19

Overconfidence and the Law of Small Numbers 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 5-20

Self-Serving Biases and Endowment Effect People often explain another person’s behavior by making attributions, either to the person or to the situation The tendency, known as fundamental attribution error, 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 5-21

Ignoring Others’ Cognitions and Reactive Devaluation 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 5-22

Managing Misperceptions and Cognitive Biases in Negotiation The best advice that negotiators can follow is: Be aware of the negative aspects of these biases Discuss them in a structured manner within the team and with counterparts 5-23

Mood, Emotion, and Negotiation The distinction between mood and emotion is based on three characteristics: Specificity Intensity Duration 5-24

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 also create a positive attitude toward the other side They promote persistence 5-25

Mood, Emotion, and Negotiation Aspects of the negotiation process can lead to positive emotions Positive feelings result from fair procedures during negotiation Positive feelings result from favorable social comparison 5-26

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 undermine a negotiator’s ability to analyze the situation accurately, which adversely affects individual outcomes They may lead parties to escalate the conflict They may lead parties to retaliate and may thwart integrative outcomes 5-27

Mood, Emotion, and Negotiation Aspects of the negotiation process can lead to negative emotions Negative emotions may result from a competitive mind-set Negative emotions may result from an impasse Negative emotions may result from the prospect of beginning a negotiation Effects of positive and negative emotion Positive emotions may generate negative outcomes Negative feelings may elicit beneficial outcomes Emotions can be used strategically as negotiation gambits 5-28