Friday, July 1, 2011
Everyday Negotiations

Demond Richardson

We negotiate everyday whether it is with your co-workers, friends, spouse or children.

I have attended a number of negotiation and mediation courses. Hold on … don’t stop reading. I know this may sound like an introduction to a boring blog entry.

My “goal” in this blog entry is to save you several laborious hours and a few hundred well earned dollars by providing two of my favorite negotiation tips.

DISCLAIMER: this is my “goal,” not to be confused with a guarantee or promise. So in the event you do not succeed in saving hours or dollars, I am in no way responsible. We Cool? I see you nodding. Cool. Great … we can move on.

Here’s the first nugget/gem/piece of advice (“NGP”): prior to a negotiation, place yourself in a state of mind where you understand that regardless of with whom you are negotiating/debating/arguing/decisioning you intentionally and purposely go in and ask questions to find out what the other person’s values are and discern how that impacts his thought process. Then and only then can you address the actual concerns that the other person has rather than the concerns that you think he has.

Have to admit the first one is a bit obtuse, but believe me – it works.

You ready for the second NGP? I hope so, because it is the real deal. It deals with what behavioral scientists, jury selectors, experienced negotiators, mentalists (like the guy on the TV show called "The Mentalist" … pretty good show) and others call the anchoring effect, which is loosely defined as the tendency for negotiators to be overly influenced by the other side’s opening bid or offer, however arbitrary or ridiculous it might be.

This is brilliantly demonstrated by Dan Ariely in his 2008 book Predictably Irrational: The Hidden Forces That Shape Our Decisions in which he describes conducting an interesting experiment at MIT where he and a colleague had students bid on items in an auction.

The researchers would hold up a bottle of wine, or a textbook, or a cordless trackball and then describe in detail how awesome and unique it was. Next, each student was instructed to write down the last two digits of his social security number as if it was the price of the item. So if the last two digits were 22, then the bottle of wine was priced at $22. And if the two numbers were 68, the cordless trackball was $68.

Following this process they then wrote down the pretend price and bid.

Guess what happened? You guessed it … the anchoring effect scrambled their ability to judge the value of the items. So people with high social security numbers like 92 paid up to 346 percent more than those with low numbers. More specifically, people with numbers from 80 to 99 paid on average $26 for the trackball, while those with 00 to 19 paid around $9.

Here are other links that discuss the anchoring effect: and Here’s the good news. If you are in the position to negotiating the price of an engagement ring, home or a new car you will be prepared to make the first offer and anchor a low price in your favor..

Posted by: Demond Richardson, Wells Fargo @ 11:17:24 am 

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