Reason and Emotions in Negotiation

Negotiation evolved with our civilizations. People all over the world have negotiated all day every day, since the dawn of humanity. Our competitive drive for survival, reproduction, resources and social status was sometimes at odds with the need to be integrated and protected by the members of the social group, so our ancestors needed to find ways to collaborate successfully. Physical conflict and group banishment were dangerous. Modern humans inherited from our ancestors the need for belonging - that is why social exclusion is so painful. But to get along, people had to play nice, or at least pretend. The Romans made Mercury the god of trade, and they thought that bargaining meant no rest. Indeed, negotiation comes from “negotium”, which is composed of “nec”: not and “otium”: leisure. Nowadays, deals are made, contracts are signed and money continuously exchanges hands. Try to find any object surrounding you right now whose price was not negotiated at least a couple of times before it was purchased. For the couch in which you are comfortable laying in while reading this, the price of the raw wood was bargained with the supplier, even before the manufacturer started producing it. Then the cost of the finished product was negotiated again with the retailer before it hit the stores. If you made the purchase in store, a seller might have tried to nudge you, creating a sense of urgency and letting you know it was a limited time offer. By the time it became part of your home decorum, it’s likely that you had paid for it at least 2 to 3 times over the manufacturing cost, even if you enjoyed a good discount.

Our whole world is a web of negotiations. And monetary gains are not the only things traded. People become emotionally invested in their negotiations and the causes they advocate for. In this whirlwind of give and take or take and take, some feel great, satisfied, even victorious, while others even struggle to get their needs met. Some feel like true winners and some get their egos bruised. The victorious ones feel that their life has purpose and the rest are still trying to find meaning. Do you feel that you are missing a trick just by being hesitant to negotiate? That is because feeling reluctant is unlikely to lead to good or favorable deals, it only results in the necessity to accept what others think is fair. We all feel differently about important negotiations. When the stakes are high, very few feel positive and energized. I like to imagine that the extremely motivated folks are like a dog with a bone. Unluckily, most of us are not highly powered by dopamine. We feel that our excitement for rewards is diminished by a cocktail of emotions made in different quantities by anxiety, uncertainty, risk aversion, fear, dread and irritation. Some folks even get angry as a self-protection mechanism to push through stressful situations. A couple of people allow themselves to get into rage mode to feel empowered, but that in itself is very counter-productive as it sabotages the ability to make sound decisions. Rage lowers the activity in the prefrontal cortex and it decreases focus, impairs memory and it keeps the brain in a state of hyper-arousal. There are studies that show that anger can make someone momentarily drop between 10-15 IQ points. And that is a lot when the average IQ is 100. But between fight or flight, most people default to flight, as negotiation avoidance is really common. Some research states that up to 94% of people negotiate only 50% of the time. At the peak of negotiation aversion, a few folks are not even taking the smallest of risks for fear of getting their egos bruised. Hence the saying: “What do you have to lose? Only your ego”. Although we often feel edgy when the stakes are very high, the silver lining is knowing that negotiations are not a matter of life and death. Likely, we are not hostage negotiators and we are not planning on becoming one. Despite any negative or less than ideal outcomes, we live to negotiate another day and maybe hone our deal-making skill.

When there is too much uncertainty in negotiation, psychology guides decisions by reducing risk and it predicts outcomes in a probabilistic way. It helps decipher and master a wide range of bargaining situations, from formal talks led by grey suits in business environments, to everyday discussions where people reach agreements about leisure time and chores. Nowadays, the use of psychology in negotiation has reached a tipping point. Just like big data companies gather information about people in order to understand consumer behavior, maximize sales and profits, psychology uses data from observation, experiments and clinical studies to understand, explain, predict, change and optimize behaviour. It’s no surprise that psychology is employed in lots of domains such as business, education, law, technology and design etc. It broadens the scope of negotiation, by analyzing people’s thoughts, behaviours and emotions. Psychology doesn’t deal with absolutes, human behaviour is far too complex, but it describes which sort of actions are more likely to pay off during a negotiation. The better negotiators are at foreseeing their partners’ actions, the higher are the odds of reaching successful deals and building mutually beneficial partnerships. In the animal kingdom, the best predator uses a form of foresight to successfully hunt the prey with a success rate of 95-97%. The dragon fly, with its electric blue diaphanous wings, uses its incredible vision and brain power to predict the insect’s flying path and then ambushes it at the interception point to prevent escape. By contrast, the strong lions who also have the advantage of group hunting only succeed up to 30% of the time. When negotiating, older forms of power based on wealth and authority still reap rewards but psychological knowledge provides a more agile form of leverage. Psychology helps shift the focus from the other’s side position to understanding their motivations, fears, needs and interests. Knowledge is power.

Traditionally, a clear understanding of the workings of the mind was not an objective for the deal makers. There was not much congruity between psychology and economy. One was studying the emotions, subconscious and the irrational, the other one dealt with “homo economicus”, the rational actor who made perfectly self interested decisions. The presumption was that in economic decisions, people had clear goals and preferences, they behaved in a logical, reasoned way to maximize their profits, they knew what they wanted and also how to get it. The university negotiation programmes only started borrowing heavily from psychology in the 1980’s-1990’s. The change towards incorporating psychological research in negotiation was nudged by studies from cognitive and social psychology that showed how in economic decision making people are affected by emotions, cognitive biases and social-emotional shortcuts.

In 1969 Daniel Kahneman started a collaboration with Amos Tversky to study systematic, flawed patterns in reasoning. Through experiments, they demonstrated that people, including the brightest of us, are vulnerable to making systematic errors in their economic decisions. In negotiation, that means that individuals are prone to accepting worse deals because of cognitive biases, such as anchoring or fear of losing out. Anchoring is an error of judgement that happens when a first piece of information, such as a very high price, influences the final bargaining result, even when deal makers know that the initial price was inflated. The antidote to escaping cognitive biases is becoming familiarised with what they are and how they work, and also, as Kahneman advises, thinking slowly - taking the time to properly analyse problems. The recognition for Kahneman’s contribution to understanding economic decision making cemented in 2002 when he won the Nobel Prize in Economic Sciences.

While cognitive psychology was dominating research, experiments conducted by social psychologists were also demonstrating that people’s opinions and decisions can be influenced, this time through social pressure and persuasion. Robert Cialdini, wrote a book in 1984 called: “Influence: the psychology of persuasion” that synthesised and integrated existing research into principles of influence such as: authority, social proof, liking and scarcity. In the first couple of years the book was unsuccessful with the general public but it became popular in the university classrooms. Soon enough business professionals adopted the book for its effective and proven methods to increase sales and get better deals. Sales techniques that capitalise on limited time offers, exclusivity, flash sales, low-stock warnings and invitation only offers, are all examples that use the scarcity principle that states that people perceive products more valuable and desirable when they are limited in time or quantity.

The 1990s brought another important psychological construct to the attention of deal makers and negotiators around the world: emotional intelligence. Its rock star concept: empathy became a cornerstone in deal-making for its efficient use to foster trust in negotiation, communicate better, improve active listening skills and ultimately build better relationships and achieve win-wins. Soft skills are used to explain street smart as opposed to book smart. Emotional intelligence is sometimes dismissed as soft skills but it is very important in perspective taking, thus allowing people to understand the beliefs and ideas of others. When used to help individuals resist social influence, emotional intelligence is effective in managing personal drives, fears and emotions through self awareness and self-regulation. A lack in emotional intelligence can cause us to take for granted our and others’ ability to be rational in negotiations. That in itself is a source of conflict, because we can’t bring our heads around how in the world people would disagree with us, especially when what we are saying makes perfect sense - at least it does to us. Sometimes it leads to a storm of arguments- we think we are right but the way we fire our logical justifications is as heavy as a storm. And when that happens our minds stay focused on the sense and soundness of what we are saying, not on the way we deliver our thoughts. Conflicts become a battle of smarts. I am yet to witness higher stakes conflict when any of us willingly accepted defeat because we got convinced by the other party that they stood the higher ground, or because they employed better reasoning. We rather concede when trying to preserve the peace, when we don’t want to hurt others’ feelings, and we are trying to see things from their point of view. When doing that we understand that they have different motivations, thoughts, feelings and beliefs than us and we employ a type of reasoning that in psychology is called theory of mind, or perspective taking. While in familiar social situations we are able to take others’ perspective without much trouble, in new, complex or conflictual negotiations, this mental process can be taxing.

The foundations for the primacy of reason was laid by a man who lived over 2400 years ago. Countless generations of thinkers loved his ideas. His contribution to philosophy is so important that the philosophers before him are called pre-socratic. Socrates didn’t write anything. His method of dialogue based teachings was preserved and reconstructed by his students, primarily Plato, with works such as Apology, and the Republic. Plato’s disciple, Aristotle, acknowledged Socrate’s contribution to philosophy in Metaphysics, for the use of inductive arguments. Aristotle also advanced Socrate’s ideas about ethics and virtue, by introducing the concept of practical and habit based actions: the golden mean - moderation and avoidance of excess. In the tutelage lineage followed Alexander the Great, thus becoming the intellectual great grandson of Socrates. Before he ascended the throne, Aristotle was his primary tutor for 3 years, and he instructed him in philosophy, ethics and logic. The philosopher fostered in the young king analytical thinking and problem solving skills through research and inquiry. Alexander the Great became one of the best military strategists in history, who, by the age of 32 when he died, never lost a battle. Without glorifying violence, we need to look at the war by the standards of Ancient Greece when armed conflict was common. Alexander the Great was ruthless when challenged. However, a less known fact about him is the way he treated cities that did not resist, by allowing them to maintain their religion, administrative customs and habits. He showed kindness towards the defeated Persian king Darius Ⅲ and his family, by honouring them, allowing them to maintain their titles and a comfortable life style. Alexander’s education in philosophy, ethics and virtue, no doubt made him more magnanimous than other leaders of his time. And in turn, he became charismatic and he gained the acceptance and support of the royals and elites from the conquered territories.

To this day, Socrates’ methods of building arguments and of asking open ended questions as a way to explore assumptions, continues to have a profound influence in our modern-day society. They are popularised under various names and employed as negotiation and sales techniques, or therapy treatments. Deal makers often employ inductive reasoning, when they provide examples of particular cases to show a pattern and arrive at a general conclusion that supports their demands. That means that they highlight achievements to add value before they go for ‘the ask’. A seller could start from more specific observations such as: ‘in the last year we developed a great working relationship’ and ‘our deliveries were always timely and fuss free’ to deduce/ conclude that ‘we would like to have our contract extended by another year’. Socrates’ method of asking questions is still taught in law schools across the world. Sellers and negotiators are also trained to ask exploratory questions, such as ‘how’ and ‘what’ to understand the interests of the other party, reduce resistance, improve collaboration and strategically counteract unreasonable high demands. In psychology, Aaron T. Beck who founded cognitive behavioural therapy, CBT, became familiarised with the philosopher’s technique of inquiry and he applied it to CBT for treating irrational beliefs and anxiety.

But knowing how to frame things and to ask questions is only half of the answer in having successful interactions and collaborations in negotiation and psychology. Using empathy is what enables therapists in the first place to connect with their clients and build good relationships. Similarly, successful persuaders in professions such as sales, politics and media, employ their emotional intelligence to connect with people on an emotional level in order to make them interested in what they have to say. Socrates was extremely skilled when talking and debating abstract ideas, but his rigid adherence to logic was sometimes at odds with showing empathy when his fellows were losing arguments. Socrates’s life story was made even more remarkable by a high stakes event in which he had to defend himself while he was on trial for his life. The philosopher’s defence in front of the Athenian jury was recorded by his student Plato, who was 27 or 28 years old at the time, in “Apology”. How well he negotiated, and whether he won or lost, I let you later decide.

We know the trial took place in late spring in ancient Athens. On that day, the market, that was the beating heart of the city, was bustling even more than usual. A large crowd of people gathered around the 500 men in the jury. The one whose fate was going to be decided, was seemingly unperturbed. A couple of his fellows portrayed him as an ugly old man, with bulging, wide set eyes and a snub nose with flaring nostrils. His body was short and stalky with a pot belly, although in his younger days he fought bravely along with his fellow Athenians against the Spartans. He even saved the life of Alcibiades, who was a statesman and a general. Yet, this time, the sage man was defending himself against some serious charges brought by the poet Meletus. Ostensibly, he was corrupting the moral values of the younger generation and he disrespected the Gods of the city. Barefoot and dishevelled, the aging Athenian justified his actions. The Delphi Oracle told a close friend, Chaerephon, that he was the wisest man. He thought it was a riddle he had to solve because he knew he had no wisdom, “great or small”. The sage man explained his commitment to deciphering the puzzle; he had to act in accordance with the Delphi priestess, the prophetess for the Greek god Apollo, who represented order and reason. So, he came up with a method of asking questions about justice, virtue and courage to assess how wise people were. He was tirelessly trying to find someone wiser, so he could go back to the Pythian Prophetess with a refutation. But he realised that the ones he questioned, especially the most distinguished, had no wisdom, although they thought they did. Himself, he had a small advantage, because although he knew nothing, he was aware that he knew nothing. Thus he thought that Apollo’s wishes were for him to teach and practice philosophy. He believed that every man, old and young should improve their soul, as an unexamined life was not worth living. He revealed he didn’t do anything bad, and the sage Athenian asked the jury to spare him, just not at the cost of him having to stop teaching philosophy. Sadly, he was found guilty and after a second trial that determined the type punishment, Socrates was sentenced to death by drinking hemlock.

Turning back to Socrates’ analytical and deep reasoning skills, one can examine how well he negotiated when trying to make the Athenian jury sympathetic towards his cause of teaching and practicing philosophy and how well the philosopher defended his life. Scholars appreciate that he showed fearlessness in front of death and that he was highly rational. Yet, despite that, he did not successfully convince the jurors to spare him. Only 220 out of 500 people voted for his acquittal. In his defense Socrates was eloquent, he used wisdom and irony, but in negotiation, winning arguments does not automatically lead to making people change their minds. It can even backfire. During the trial, Socrates’ skill of asking questions might have appeared even arrogant and it might have made his fellows feel inferior. At different times during his trial, the philosopher’s tone alternated between satire and humbleness, ridiculing the politicians, the poets and the artisans, but also, acknowledging his own limitations. Socrates shared with the jury how he discovered that “the men in most repute were all by the most foolish”. According to his own account, the first statesman he spoke to, didn’t know “anything beautiful and good” and the poets wrote poetry not by wisdom, but by “genius and inspiration”, as they said “many fine things but do not understand the meaning of them”. By contrast, he thought that “some inferior men (are) really wiser and better”. Socrates, acknowledged that he didn’t know anything, but convinced himself “to be superior” because, unlike the people he spoke to, he was aware that he knew nothing, while the people he spoke to didn’t know anything, but they were not aware that they didn’t know. He became aware that in the process of asking people philosophical questions, he got an evil name, and he made many dangerous enemies. He defended himself by saying that he was trying to persuade people “to care about the greatest improvement of the soul”. Socrates also showed humbleness by self describing as “sort of gadfly” sent by God, who was fastening upon, persuading and reproaching “the great and noble steed” that was the city of Athens, that became “tardy in his motions owing to his very size”, and required “to be stirred into life”.

Reading Plato’s work about Socrates’ trial can make the detached reader become rather sympathetic towards the philosopher’s noble cause of teaching philosophy. But how emotionally intelligent Socrates was, is up to debate. Despite showing a lot of self control and self-awareness, Socrates did not communicate in a way that showed sympathy for the intellectual ability of his fellow Athenians. Someone could as easily harbour a whole different set of feelings if they were part of the Athenian elite and they got the chance to talk and debate with the philosopher in the market or any other public spaces, as that would have been the custom back them. No doubt, someone as skilled as Socrates could have easily made a foul out of many of us. What better argument to anything than to openly assume ignorance and question.

Socrates was skilled at challenging assumptions by looking at inconsistencies in the arguments, exceptions and alternatives, but did he negotiate well in defending himself? Well, someone could argue that for Socrates that was not the main focus. He valued the pursuit of philosophy over his life. But Socrates’ method of questioning backfired by proving the members of the Athens’ elite stupid and ignorant in public. And losing arguments in front of an audience can easily make someone embarrassed. That was a sure way to alienate people. At best, the philosopher can be seen as noble in his pursuit of asking important and difficult questions, at worst, Socrates can be regarded as an intellectual bully. Psychology brings forward a better, improved way to argue successfully. Rather than being combative, it is preferred to find common ground with the ones you have disagreements with - a process named by Kahneman “adversarial collaboration”. That means abandoning a win-lose mentality, if one is right, the other one must be wrong, to try to find solutions or alternatives that satisfy both parties.

Over the last 50 years years or so, psychology supported a shift in perspective over the way people successfully conduct negotiations. In order to reach successful agreements, people need to collaborate. Beating the other party with logic, is not likely to bring success over the long haul. As the tragic fate of Socrates shows, winning arguments while alienating your counterparts is a poor strategy. People’s emotions in negotiation matter.

Further Reading