if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle. sun tzu 孫子 6th century bc general, the art of war 1 © Victoria Pynchon ‘07  a theory of the mind the three cognitive biases that interfere with our ability to negotiate the best deal three really good ways to combat those biases and two ways to consistently get the better deal 2 © Victoria Pynchon ‘07 theory of mind 3 © Victoria Pynchon ‘07 our ability to reason arose from our need to understand one another’s intentions and motivations, allowing us to coordinate within a group 4 © Victoria Pynchon ‘07 but we never learned to read one another’s minds; suspicion followed 5 © Victoria Pynchon ‘07 we developed certain tendencies of thought called cognitive biases universal ways of thinking about what motivates other people 6 © Victoria Pynchon ‘07 cognitive biases that interfere with our ability to negotiate a good settlement CB 1: reactive devaluation CB 2: confirmation bias CB 3: clustering illusion 7 © Victoria Pynchon ‘07 How they work; why they’re harmful & how we can avoid their ill effects 8 © Victoria Pynchon ‘07 two ways to consistently gain the upper hand by anchoring and framing 9 © Victoria Pynchon ‘07 what do we most want to know? 10 © Victoria Pynchon ‘07 only seven percent of negotiators sought information that would have revealed opponent’s true goals when it would have been dramatically helpful to do so. 11 © Victoria Pynchon ‘07 particularly troublesome when you know that your belief about their bottom line will have more influence on the outcome of the negotiation than any other factor 12 © Victoria Pynchon ‘07 13 © Victoria Pynchon ‘07 reactive devaluation the tendency to discount as unworkable, unworthy, wrong or even sinister any suggestion from the opponent, just because the opponent is the source of the idea 14 © Victoria Pynchon ‘07 reactive devaluation prevents us from learning another’s mind what do they want/need what do they have of value how do they value it how do they value what we have why do they want what they are seeking 15 © Victoria Pynchon ‘07 solutions for reactive devaluation ask diagnostic questions Interests need $100K to design new trademark Priorities  trademark design less important than renegotiation of royalty agreement 16 © Victoria Pynchon ‘07 confirmation bias tendency to search for and interpret information in a way that confirms our preconceptions 17 © Victoria Pynchon ‘07 confirmation bias prevents us from knowing our own minds/risks 18 © Victoria Pynchon ‘07 confirmation bias solutions neutral third party story telling 19 © Victoria Pynchon ‘07 clustering illusion •We tend to see patterns where none exist we tend to see patterns where none exist 20 © Victoria Pynchon ‘07 ‘07 © Victoria Pynchon clustering illusion problems inhibits ability to “read the mind” of our enemy prevents us from accurately assessing •perils •opportunities 21 © Victoria Pynchon ‘07 clustering illusion solution: strategic joint sessions 22 © Victoria Pynchon ‘07 23 © Victoria Pynchon ‘07 two cognitive biases we can immediately use to . . . . . . influence & avoid being influenced 24 © Victoria Pynchon ‘07 anchoring we tend to be influenced by any number that enters the negotiation environment 25 © Victoria Pynchon ‘07 the negotiator who makes the first reasonable offer will set the bargaining range for the entire negotiation 26 © Victoria Pynchon ‘07 resist anchoring  create own false anchor  move toward that number © Victoria Pynchon ‘07 27 framing influence or be influenced 28 © Victoria Pynchon ‘07 framing a means of influencing another’s perception by narrowing the ways in which an item or an idea can be characterized © Victoria Pynchon ‘07 what if you had to measure the size of something by using two frames? what if you could only use one? 29 framing experiments • how tall was the basketball player –79 inches • how short was the basketball player? –69 inches 30 © Victoria Pynchon ‘07 use framing in negotiations language that emphasizes position  buyer uses words of diminishment  seller uses words of increase reframe losses as gains & gains as losses don’t frame too early or you may lose opportunities 31 © Victoria Pynchon ‘07 if you know your enemies and know yourself, you will not be imperiled in a hundred battles 32 © Victoria Pynchon ‘07