OBS220: The Mind and Heart of The Negotiator

Chapter 7
Money vs Relationships

Successful negotiation is often equated with the maximization of monetary wealth. At the same time,
successful negotiation involves building and maintaining effective relationships. The point we make in
this chapter is that maximizing monetary wealth need not come at the expense of building relationships.

Subjective Value

Subjective value refers to the perceived quality of negotiation that cannot be easily measured in
economic terms. To be sure, people involved in negotiations are not simply concerned only with the
exchange of economic value, but also other factors.

Each of these resources varies in terms of particularism (how much utility we derive depends on who is
providing it) and concreteness (how tangible it is). Love and social status are less concrete than services
or goods.

The Subjective Value Inventory (SVI) assesses four major concerns held by negotiators:
o Feelings about instrumental outcomes.
o Feelings about themselves.
o Feelings about the process.
o Feelings about their relationships with whom they are negotiating.

Rapport

Rapport refers to feelings of closeness, understanding, and harmony among people in relationships.
Verbal behavior is key to the creation of rapport between negotiators. The Verbal Rapport Assessment
scale assesses how negotiators build rapport and focuses on 13 verbal measures.

In negotiation, the creation of rapport is primarily influenced by the counterparty’s verbal behavior, as
well as the interaction behaviors of both negotiators. The establishment of rapport often involves
sharing information; however, information sharing may not be symmetric.
Sequential Negotiations and Bargaining History

Negotiators’ previous experience with one another can strongly influence how they behave in the future.
Social psychological outcomes from prior negotiations predict economic performance in subsequent
negotiations. Our feelings about prior negotiations not only affect subsequent negotiations with that
counterparty, but they also affect subsequent negotiations with different counterparties, due to spillover
effects. Asymmetrical history is often characterized by conflicting interpretations of their history, which
can sometimes lead to feuds. When negotiators share an asymmetrical history, they are more likely to
come to an impasse (fail to reach agreement).

Trust and Temptation

Trust is the willingness to make oneself vulnerable to another person. Trust is an expression of
confidence in another person that one will not be put at risk, harmed, or injured by the actions of others.
Negotiators who trust each other are more likely to share information and reach integrative agreements.
Conversely, when negotiators don’t trust each other, they are more likely to engage in value-claiming
strategies.

A meta-analysis of trust in negotiation suggests that trust does indeed influence the creation of mutual
gains, but that it may come at the personal expense of the trustor. Trust has a negative relationship with
distributive (claiming) behaviors, but such distributive behaviors have a positive relationship with the
trustor’s outcome. Trust is more strongly related to mutual gains than the individual outcomes of the
negotiator.

Trust Propensity

Trust propensity refers to a negotiator’s belief in others’ trustworthiness. Greater trust propensity
increases the development of trust amongst negotiators and increases information exchange about
interests and decreases distributive behaviors, such as substantiation, argumentation, and single-issue
offers.

Three Types of Trust in Relationships

1) Deterrence-Based Trust
Deterrence-based trust is based on consistency of behavior, meaning people will follow through on what
they promise to do. Behavioral consistency, or follow-through, is sustained by threats or promises of
consequences that will result if consistency and promises are not maintained. The consequences most
often used are punishments, sanctions, incentives, rewards, and legal implications. Deterrence-based
trust often involves contracts, surveillance, and sometimes punishment.

There are two key problems with deterrence-based trust systems. First, they are expensive to develop
and maintain and second, they can backfire. Reactance theory argues that people do not like their
freedom taken away and will act to reassert it.

2) Knowledge-Based Trust
Knowledge-based trust is grounded in behavioral predictability, and it occurs when a person has enough
information about others to understand them and accurately predict their behavior.
Whenever informational uncertainty or asymmetry characterizes a relationship, it provides opportunity
for deceit, and one or both parties risk exploitation. Trust is a consequence of or response to uncertainty.
Knowledge-based trust increases dependence and commitment among parties.

3) Identification-Based Trust
Identification-based trust is grounded in complete empathy with another person’s desires and
intentions. In identification-based trust systems, trust exists between people because each person
understands, agrees with, empathizes with, and takes on the other’s values because of the emotional
connection between them. Identification-based trust means that other people have adopted your own
preferences.

Building Trust: Rational and Deliberate Mechanisms

The cognitive route is based on rational and deliberate thoughts and considerations; the affective route
is based on intuition and emotion. The cognitive and the affective routes to trust have different triggers
and turning points in negotiation.

1) Transform Relationship Conflict into Task Conflict

Relationship conflict (emotional conflict) is rooted in anger, personality clashes, ego, and tension. Task
conflict (cognitive conflict) is largely depersonalized. It consists of argumentation about the merits of
ideas, plans, and projects, independent of the identity of the people involved. Task conflict is often
effective in stimulating the creativity necessary for integrative agreement because it forces people to
rethink problems and arrive at outcomes that everyone can accept. Relationship conflict threatens
relationships, whereas task conflict enhances relationships.

2) Agree on a Common Goal or Shared Vision

When negotiators share a vision of the best method for reaching a bargaining agreement, they are more
likely to make less selfish offers and reach an agreement.

3) Social Networks
Negotiators who do not know each other may attempt to build a more trusting relationship by trying to
find a common node in their social networks. An investigation of a weekly business “mixer” revealed that
people don’t mix as much as would be expected, given the purpose of the mixer. Affect-based trust is
high among people who are embedded densely in their networks and among those who provide social
support; cognition-based trust is higher in those with whom people engage in instrumental exchanges.

4) Shared Problem or Common Enemy

It is remarkable how the presence of a common enemy can unite people and build trust.

5) Future Focus
If negotiators can forget the past and focus on their future, they can go a long way toward building trust.
When negotiators expect to have future interaction with the counterparty, they have lower aspirations,
expect negotiations to be friendlier, are more satisfied, and predominantly use a problem-solving
bargaining style. Compared to onetime negotiations, those who expect to interact in the future have
harmonious expectations and seek mutually beneficial solutions.

Building Trust: Psychological Strategies

Psychological mechanisms for building trust are different from the rational, cognitive mechanisms
discussed earlier in that people tend not to talk about these factors explicitly; rather, savvy negotiators
know how to capitalize on them intuitively.

1) Similarity
The similarity-attraction effect may occur based on little and sometimes downright trivial, information.
Many sales training programs urge trainees to “mirror and match” the customer’s body posture, mood,
and verbal style because similarities along each of these dimensions produce positive results. Similarity
in dress also has dramatic effects.

2) Mere Exposure
The more we are exposed to something, the more we like it. The mere exposure effect is extremely
powerful and occurs below the level of our awareness.

3) Physical Proximity
When students are seated alphabetically in a classroom, friendships are significantly more likely to form
between those whose last names begin with the same or a nearby letter. This is what is called the
propinquity effect. Similarly, people given a corner seat or an office at the end of a corridor make fewer
friends in their organization.
Certain aspects of architectural design make it more likely that some people will meet each other more
often than with others, even though the physical distance between them might be the same. This is
known as functional distance.

4) Reciprocity
According to the reciprocity principle, we feel obligated to return in kind what others have offered to us.
This principle is one that all human societies subscribe to, it is a rule permeating exchanges of all kinds.
Feelings of indebtedness are so powerful that, if unresolved, they are carried into the future and are
passed on to the next generation to repay. People feel upset and distressed if they have received a favor
from another person and are prevented from returning it.

People are aware of the powerful grip that reciprocity has on them. People often do not accept favors
from others because they do not want to feel obligate. Reciprocity is made even more difficult when
parties place different value on aspects of a relationship.

5) Schmoozing
Schmoozing has a dramatic impact on our liking and trust of others. Even a short exchange can lead
people to develop trust.

6) Flattery
People like others who appreciate and admire them. People are more likely to trust others who like them
and to respond more favorably when they are flattered. The most strategic type of flattery, in terms of
advancing one’s own interests, is to flatter another person on a personally important dimension about
which he or she feels somewhat insecure.

7) Mimicry and Mirroring

Strategic behavioral mimicry can facilitate the discovery of integrative outcomes. Negotiators who mimic
the mannerisms of their opponents secure better individual outcomes and greater joint gains, compared
to negotiators who do not mimic. Negotiators who mimic the mannerisms of the counterparty build
trust. When negotiators interact virtually or online, those who mimic their counterparty’s language
receive better outcomes.

8) Self-Affirmation
Is a technique in which a person focuses on an important personal value. When people focus on
important personal values at the outset of a potentially contentious negotiation, they are less likely to
derogate the concessions made by others and are more open to agreement.

Distrust and Suspicion

Distrust involves having negative expectations about another person’s motives; suspicion involves
ambiguity about another person’s motives. Suspicion can enhance integrative outcomes by prompting an
information search.

1) Trust Breach
One of the biggest threats to trust in a relationship is a breach or defection. A breach occurs when one
or both people violate the trust that has been built between them.
 2) Need for Closure
People who have a greater need for closure develop more polarized judgments about others, such that
they have high trust in close others and low trust in distant others, and they don’t revise their levels of
trust even when receiving feedback about the counterparty’s actual trustworthiness.

3) Dispositional Attributions
A dispositional attribution is one that calls into question another person’s character and intentions by
citing them as the cause of a behavior or incident (e.g., arrogance, greed). A situational attribution cites
one or more situational factors as the cause of a behavior or incident. Assigning dispositional attributions
to opponents’ behaviors can threaten the trust between negotiators. It is much more difficult for people
to respond to a dispositional attribution than a situational one.

4) Focusing on the “Bad Apple”

In a team or group, one person may have a reputation for being less trustworthy, tougher, or less easy to
work with than other members of the group. We call this person the “bad apple,” and bad apples can
stand out. Unfortunately, one bad apple can spoil the bunch.

Repairing Broken Trust

When trust has been broken, it is often in both parties’ interests to repair trust because broken
relationships are often costly in terms of the emotions involved and the opportunities lost. Apologies are
the most effective means of repairing broken trust. However, some apologies are more effective than
others. One investigation concluded that six components of apologies were important to convey.

A key characteristic that moderates the recovery of trust are beliefs about moral character. People who
believe that moral character can change over time are more likely to trust after an apology, but people
who don’t believe in such change don’t trust again.
Relationships in Negotiation

Our personal life is intermingled with our business life in relationships we cannot easily classify as either
strictly personal or strictly business. We refer to this type of relationship as an “embedded” relationship.
We consider the relevant implicit norms and rules that characterize each of these three types of
relationships and their implications for trust in negotiations. The behavior of people in relationships is
guided by a shared set of rules. Relationships influence not only the process of how people negotiate,
but also their choice of an interaction partner. When a negotiator has “baggage” from the past, it affects
their ability to go forward.

Negotiating with Friends

Interpersonal relationships influence negotiators’ expectations, and they tend to expect more generous
negotiation offers from those who are close to them. When expectations are not met, negative emotions
arise that can harm the quality of negotiated agreements. To the extent that negotiators in close
relationships engage in perspective-taking, they can monitor their expectations and reach successful
outcomes.

Quality of Outcomes

Friends who find themselves at the bargaining table are more likely to adopt an expansive focus and
create value-added tradeoffs that generate joint gains across negotiation contexts, not just merely within
a given negotiation. One investigation examined negotiations among strangers and friends and found
that one of three patterns emerges early on:
• Opening up (complete and mutual honesty)
• Working together (cooperative problem solving)
• Haggling (competitive attempt to get the best possible deal for oneself)

Unmitigated Communion

Unmitigated communion refers to the fact that people believe they should be responsive to others’
needs and not assert their own. “Friendship dictates that we should be concerned with fairness and the
other person’s welfare, while negotiations dictate that we should get a good deal for ourselves.” These
two dictates conflict with one another. Relational accommodation occurs when people make economic
sacrifices to preserve relationships. Most friendships are built on communal norms, which mandate that
we should take care of people we love, respond to their needs, and not “keep track” of who has put in
what. The opposite of communal norms is exchange norms, which state that people should keep track of
who has invested in a relationship and be compensated based on their inputs.

Competitive Motivation

Friends are less competitive with each other than they are with strangers. Friends exchange more
information, offer greater concessions, require fewer demands, and are more generous with one
another. Negotiators in a relationship are often unable to profitably exploit opportunities to create value.
“RSC” refers to relational self-construals. To best predict negotiation outcomes, it is important to consider how
both negotiators regard the relationship. When both negotiators have a high relational focus, there is a tendency to
satisfice. When one negotiator has a high relationship focus and the other does not, there is distancing; when both
are low in relationship focus, there is trading. It is only when both negotiators are moderately focused on the
relationship that integrating occurs.

Mismanagement Agreement

The notion that among family and friends, conflict is to be avoided at all costs, even if it means a lose–
lose outcomes for all involved. The need for friends to maintain the illusion of agreement means that
important differences in preferences, interests, and beliefs are often downplayed or buried. It is precisely
these kinds of differences that enable negotiators in personal relationships to fashion value-added trade-
offs and develop contingent contracts. Friends and families need a way to make their differences known
so they can capitalize on them in a win–win fashion.

Compromise

When it comes to dividing the pie, friends use an equality rule (thereby allocating equal shares to
everyone involved), whereas strangers and business associates use an equity rule (merit-based rule) in
which those who have contributed more are expected to receive more. Unfortunately, equality norms
may promote compromise agreements, thereby inhibiting the discovery of integrative trade-offs. Norms
of equality are not blindly applied by people in close relationships.

Negotiating in Exchanged Relationships

Exchange norms are rooted in market pricing. Market pricing is a method by which everything is reduced
to a single value or utility metric that allows for the comparison of many qualitatively and quantitatively
diverse factors. Market pricing allows people to negotiate by making references to ratios of this metric,
such as percentage share in a business venture. Money is the prototypical medium of market pricing
relationships. Capitalism is the ultimate expression of market pricing.

We Choose our Friends but Not our Coworkers.

We often must deal with people we do not like and may regard to be offensive. It is often difficult for
people to separate their feelings about someone as a person from the business at hand.
Status and Rank

Most friendships are not hierarchical, meaning that people in friendships do not have different status
and rank. Businesses are generally organized around rank and status—either explicitly (e.g., an
organizational chart) or implicitly (e.g., salaries, number of supervisees, office space).

Swift Trust

Sometimes we need to build trust with people very rapidly, based on little information, and in many
cases, with no expected meaningful future interaction. Business situations increasingly require swift
trust, which is necessary among people who have a finite life span in a temporary system.

The Myth of the One-Shot Business Situation

Social networks mean that even though the particular people in a business interaction may never
interact or see one another again, their companies will interact again, or others in their social network
will become apprised of the interaction, which will affect the nature of future business interactions. The
one-shot business situation may be extinct.

Multiplex Relationships

Multiplex relationships refer to relationships that involve both communal (friendship and family), as well
as transactional ties. Family businesses involve negotiations on both a relationship and business level.
When friends and family do business, their relationship is embedded in an organization and is known as
an embedded relationship.

These relationships would seem to have several advantages, the most important of which is facilitating
the nature of business exchange by initiating self-organizing governance arrangements that operate
through expectations of trust and reciprocity, rather than expensive deterrence mechanisms. Firms that
embed their bank exchanges in social attachments were more likely to have access to capital and
received more favorable interest rates on loans. Family businesses are examples of embedded, multiplex
relationships and can be very challenging.

Emotional Potential

When business and friendship combine, the emotional potential can often be overwhelming, and
interpersonal conflict can result. The separation of work and friendship creates a “buffer zone” for the
parties involved. However, when things go awry in an embedded relationship during the course of
negotiation, all systems can potentially fail.

Internal Value Conflict

Personal relationships are driven by people’s need for acceptance, love, and identity, whereas business
relationships are generally guided by a need for achievement and utilitarian goals. In embedded
relationships, people often experience more internal value conflict because competence and liking are at
battle with one another.
Myopia

We have seen that embedded relationships can often reduce the costs associated with surveillance.
Embedded relationships may create myopia if people are reluctant to move beyond their own networks.
These are sticky ties—relationships that emanate from ingrained habits of past social interaction. Most
people are reluctant to turn to new, untried partners for information, resources, and the variety of
interactions that are required in organizations.

Just a reminder: My notes are a basic reference of the textbook. Please refer to the textbook for more
information.