Sunday, December 29, 2013

Limitations to Negotiation: Over Confidence.


Over confidence impacts negotiations in two ways.  It strongly impacts negotiations in the opening moves as the basic "landscape" is defined. It can also affect negotiations when they escalate to "arbitration".

Anchoring and Adjustment

One of the most powerful heuristics is Anchoring and Adjustment.  There is a vast amount of literature that supports the contention that we over-weight our initial position and underweight the content of later information that would "bend" our initial map.

This can be vividly demonstrated with the following parlor game (also good for staff meetings).  Separate the group into two.  Tell them you are going to give them an task in estimating.  You will read off a multiplication problem and as soon as you are done you want each person to write down their estimate.

The plan is to read off the numbers quickly enough that the subjects can keep up for the first third of the sequence but then have to apply "Kentucky Windage", i.e., rely on intuition to incorporate the effects of the last two thirds of the sequence.

To one group you read off 1-times-2-times-3-....-7-times-8.  OK, write down our estimate.

To the other group you read off 8-times-7-times-6-times...-2-times-1.  OK, write down your estimate.

On average the first group will have a typical estimate of 64.

On average the second group will have a typical estimate of 320.

The correct answer is  40,320....or about 125 times higher than the high estimate.  So much for the efficacy of Kentucky Windage.

The intention of trotting out this parlor game is to demonstrate the overarching effect associated with those first, broad brush strokes that rough-out the painting.

In the beginning...

The entire tenor of the negotiation depends upon a party being able to present a coherent, believable starting point to the negotiations.  It is a bit like driving on ice.  An overpowering (over confident) start will cause the wheels to start spinning and all hope of traction will be lost.


We have a rule in our house.  We do not allow kids to have two "over nights" outside the house in a row.  We found the kids came home a wreck and it threw the entire household into turmoil.  One night was fine.  Two nights were ugly.

Kubota somehow talked himself into believing that he could convince us to let him go to four over-nights in a row.  He had great confidence in his ability to convince us to let that happen.  His logical points were
  • It was four different places
  • He had already committed to spending the night at each
  • It is vacation and there is time afterward for him to recover
  • The rule is "no two-in-a-row".  He would not be gone two nights.  He would be gone four.
His plan had no credibility with us and he completely lost the traction to influence his immediate future.  It was a non-starter....for us.

Kubota went to the wall with his plan because he was absolutely sure that we would....that we had to...agree with it.  In other words, he escalated because he was absolutely sure that we would roll over.

Mentally picture is of a person juggling.  They might be able to juggle two eggs.  They might be able to juggle three eggs.  They might be absolutely sure they can juggle eight eggs....but that surety is not enough to prevent a linoleum omelet.

Kubota could have painted an image of four nights spread over 8 days and we would likely have accepted that as the default plan.  That would have been the anchor.  But he allowed his hopes to color his judgement and became over confident.  And he ended up with a linoleum omelet.

* Inspired by Heuristics in Negotiation, Limitations to Effective Dispute Resolution by Bazerman and Neale. 

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