23 May 2000  Research & Ideas

The Emerging Art of Negotiation

A negotiation is rarely open-and-shut, but research is starting to reveal a number of ways that this complicated and often-volatile process might go a lot better for all concerned. HBS Professor Kathleen L. Valley, HBS Senior Research Fellow Max H. Bazerman and two colleagues point the way toward a new understanding of the psychology of negotiation.

 

It's easy to come up with a recipe for disaster when the subject is negotiation. As in chess, once you sit down at the table every move counts. So many factors compete to undermine an optimal settlement: the emotions of both participants; the potential for misunderstanding what could be gained (or lost); differing interpretations of what constitutes fair play.

Be it a straightforward business transaction, a divorce or an international struggle to reach a peace agreement, there's much that can go wrong.

But there's also much that can go right—or at least go better for all concerned.

Ongoing psychological research points toward new directions in the understanding of what makes a negotiation work or not work. In an article recently published in the Annual Review of Psychology, HBS Professor Kathleen L. Valley, HBS Senior Research Fellow Max H. Bazerman and their colleagues Jared R. Curhan and Don A. Moore (doctoral students at Stanford and Northwestern respectively) synthesized groundbreaking negotiation studies to date, and pinpointed five emerging areas of research which they consider critical for the future.

The psychological study of negotiation has undergone tremendous shifts in perspective over the last 30 years, they write, with these changes often occurring in tandem with broader developments in psychology and in society as a whole. Most recently, analysis has begun to look at social or personal factors against a backdrop of "rational" (or optimal) ones. While Bazerman and Valley and their colleagues herald the developments in negotiation studies, they also believe that the five emerging areas will enable researchers to comprehend—most importantly—how negotiators themselves define and create the game, both psychologically and structurally.

Learning how negotiators define the game, the group writes, "may be key to better understanding why parties do not reach agreements when we think they should."

Preconceptions Count

No one goes into a negotiation completely blind. Almost everyone who walks into a negotiation already holds a fairly strong preconception of how they expect it to go down. How such preconceptions, or what researchers call "mental models," actually control the outcome of a negotiation is one of the important new areas of investigation.

Mental models, they have found, encompass a variety of interlocking elements. These elements can include how each person understands himself or herself; how they understand their relationship with the other person as well as that person's characteristics; and what they perceive and know about the bargaining process and structure.

One area of new research into mental models is looking into how the framing of a negotiation can change the game. In one experiment, for example, it was shown that the amount of cooperation among participants was affected far more by what the game was called—whether the participants were told it was a "Community Game" or a "Wall Street Game"—than by the individual dispositions of the participants.

"Simply changing the name of the game changed the mental models the parties brought to the situation, and with it their definitions of what was acceptable or appropriate behavior," the group writes.

Other studies examine what are known as "shared mental models." In these studies, researchers analyze how the interaction between negotiators, springing from the negotiators' beliefs and preconceptions, can actually alter the game and fix its outcome.

"Ethical" Behavior

Varying interpretations of ethical standards are also tightly linked with how negotiators understand and define the game. Laboratory research on ethics in negotiation is starting to reveal, for instance, just how flexible and ambiguous such "standards" can be.

Different motivations and incentives all weigh in to alter negotiators' interpretations of ethical standards. Researchers are also discovering that people tend to see themselves as more ethical than the next person, and often justify ethically questionable behavior as self-defense. Negotiators have a hard time compromising on issues that are sacred to them, and may regard the negotiation itself as immoral. On the flip side, negotiators who declare that a topic is "sacred" and off-limits for discussion—when in fact it is not—can place unnecessary constraints on the game and on their ability to reach compromise.

Face-to-Face, Phone or E-mail?

The empirical study of how communications media affects individuals' definitions of the negotiation, especially in an era of expanding communications possibilities, is also drawing the interest of researchers. Should you meet face-to-face, bargain by phone or resort to e-mail? The answer, researchers say, is, it depends.

"The technology we use to negotiate affects our definition of the negotiation game and the behavior deemed appropriate for the interaction," write Bazerman, Valley et al.

Generally, face-to-face meetings foster rapport and offer fewer openings for misunderstanding and deceit. If both parties are already familiar to each other, however, face-to-face meetings may not be necessary. And if tensions are already high, then negotiating by phone may be the best choice, so as to reduce the possibility of pressure tactics.

E-mail is a tricky new area. Since e-mail lacks what researchers call social context cues, it allows more "talk time" for all, and this dimension of egalitarianism may make for a more fruitful exchange. There is a downside, though, because e-mail also seems to make people less inhibited in a negotiation scenario. If the negotiation is already tense, this lack of inhibition can make a bad situation worse.

One study found, for example, that among 24 four-person decision making groups interacting via computer, there were 102 instances of rude or impulsive behavior. Another 24 groups that interacted in person yielded only 12 remarks of that nature.

Crossing Cultures

Negotiating across cultures is cited in the article as being "akin to a dance in which one person does a waltz and another a tango." So what can negotiators do to make the process a little more graceful?

The group outlines recent experiments that focus on two areas: differences in the negotiation game between cultures, and how negotiators might change their game (or even their mental models) to bring about better negotiation.

In the first area, research has focused most actively on the cultural dimension referred to as "individualism-collectivism." This research has revealed, for instance, that negotiators from certain cultures—i.e. United States, Great Britain, the Netherlands—seem more concerned with maintaining individual rights, while others—from Colombia, Pakistan, Taiwan, for example—focus more on preserving relationships. The first group is more likely to resort to competition and problem solving in the negotiation, while the second prefers more indirect means of arriving at a solution.

Less research attention to date has addressed three other important dimensions of cross-cultural interaction. These include power distance (how social hierarchies affect negotiation), context of communication (the degree to which messages inherit meaning from the setting in which they are delivered), and different conceptions of time (whether negotiators from certain cultures prefer to handle issues in a sequential or simultaneous fashion).

Other research suggests that negotiators might deliberately change the negotiation game across cultures, either by transcending their own cultural background or by having opponents jointly follow the culture with which both negotiators are most familiar. While these are reasonable ideas in theory, the jury is still out on whether or not they are viable for the typical negotiator.

Negotiation with More Than Two Players

As the number of parties in a negotiation increases, the complexity of the dispute expands rapidly. New research is studying how this complexity affects the negotiation and suggests ways to transcend the confusion.

Negotiators might make the problem work better for everyone by applying certain rules, such as controlling participants' opportunities to speak or specifying how the group will make a decision (via majority rule, unanimity, etc). Many of these methods, however, also place constraints on the negotiation since they prevent people from learning enough about each other's interests to strive for the best possible outcome.

Experiments also indicate, however, that negotiating teams can have distinct advantages, including enhanced capability to exchange information and generate high quality ideas.

A Sub-Field No Longer

As laboratory researchers, write Bazerman, Valley, Curhan and Moore, they are "sympathetic to the constraints of the laboratory methodology" and cognizant of how important it can be to understand how their participants redefine the game.

"Most negotiation experiments are easiest to create when it is in the power of the researcher to specify the game," the group writes. "Unfortunately, this researcher specification may have inhibited the study of how negotiators psychologically define the game."

The psychological study of negotiation, once a mere sub-field of social psychology, can now draw on a wealth of work throughout many different segments of psychology: social psychology, cognitive psychology, behavior decision research, and clinical psychology. It may well also benefit from preliminary studies in how physiological factors can affect negotiation.

As the group points out in their conclusion, "We hope that these multiple lenses can create a more unified understanding, so that psychology can help the world overcome barriers to effective negotiation behavior."