Negotiation
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What Is Your Leverage in Negotiation?

15 February 2025 — Negotiation Psychology

leverage strategy cognitive biases Business Relationships

What is your leverage in negotiation? To have leverage means to have an advantage that makes it easier to obtain success in a negotiation. The word leverage comes from the French “levier” that has its root in the latin “levare” which means light in weight.The description of a lever is that of a rigid bar that pivots on a fulcrum (fixed point) that makes it easier for people to move or lift heavy objects. Longer levers allow you to lift more weight. Therefore, the more leverage you have, the easier it is to receive higher concessions in negotiation. As Archimedes said: “give me a lever long enough and I will move the whole world” (Smith, 2023). There are a couple of levers in the human body. The calf muscle lifts all the body weight by pulling on the heel bone via the Achilles tendon, thus exercising less effort. The main idea is that when people have leverage they can influence the negotiation outcome with less effort. The reasons why people feel that they don’t have leverage are varied and they are both subjective and objective. An objective lack of leverage is measurable and it consists in not having any or other satisfactory alternatives, for various reasons such as being dependent on a sole supplier, being constrained by time to sell a house, needing a job in an oversaturated job market, etc. If something you really need is scarce, then the other party can impose very high demands. A subjective lack of leverage in negotiation is harder to assess because it refers to the way in which our individual judgements, thoughts and feelings are influenced by emotions, beliefs and cognitive biases. Often people simply perceive not having any advantage in a negotiation because they accurately assess an objective lack of leverage. However, on a short term basis, most people can’t easily improve their objective leverage. It takes time to build more financial security, gain more knowledge and skill. In theory, any advantage such as economic power, social connections, market knowledge, etc has the potential to become a source of leverage, but people are not likely to create more value and have successful collaborations and negotiations without analysing alternatives, looking at solutions, creative thinking, good communication and even questioning standards and rules.

Psychology offers lots of tools to increase the leverage in a negotiation. They are relatively easy to implement and their benefits, fairly or not, sometimes overcome an objective lack of leverage. The psychological tools to gain negotiation leverage can be used in both positive and negative ways. For example, using the social proofing principle, hotels can let their guests know that over 75% of customers are reusing their towels. With this information, the guests become more likely to reuse their towels because. When people make their decisions they are influenced by wanting to belong to a certain group or follow some norms or rules that are accepted by the majority. While swaying people to reuse their towels is harmless and even good for the environment, some less ethical negotiators employ disturbing tricks such as fear mongering to manipulate and shift people’s decisions. Unfortunately, fear mongering works because it triggers strong survival instincts. For example, authoritarian leaders apply it to gain the support and trust of people who are looking to feel safe in times of high political turmoil or economic instability.

When analysing one’s leverage, people make the error of thinking about leverage primarily through the lens of objective power, by focusing on economic resources, knowledge and skills. Sometimes, surprisingly and not necessarily fairly, the psychological factors are the most important. Psychology shows that individual assessments of a situation are susceptible to cognitive and emotional biases caused by fear of losing out, avoidance, anxiety, poor self control, etc. So, people need to be aware of their own biases in order to improve their decision making process and to gain leverage in negotiation. There is extensive research brought by cognitive and social sciences about the way in which cognitive biases affect people’s decisions. People’s vulnerability to biases is extensively used in advertising to increase sales. Shrewd marketers employ the fear of losing out (FOMO) for their own personal gains, by using flash sales, low stock alerts, “30 people are watching this product” to influence people to make impulse purchases for fear of missing out. The anchoring effect was a cognitive bias demonstrated by Amos Tversky and Daniel Kahneman. They showed that the first piece of information, for example the price of a property, has an anchor effect over the subsequent judgments, even when people know that the anchor is not accurate, or even when they are real estate agents themselves (Kahneman, 2011). The anchoring effect is utilized when an initial high asking price influences the final price agreed though negotiations. The concessions through price drops are seen as reasonable even if the final price is still pulled up. Another example could be offered by practices of some software companies that ask for a high price for a premium/pro tier, for example £115 a month, making the basic tier of £49 look reasonable in comparison.

Psychological tools of influence to gain an advantage in negotiation are also utilized when skilled negotiators sway people’s feelings and emotions for their advantage. For example, a study conducted by Texio, by analysing 10377 interview assessments, found that people described as having great personalities are 12 times more likely to get the job. Also, being perceived as friendly makes it 5 times more likely to get offers, and being seen as energetic increases the odds of getting a job, 4 times. When two job candidates have a similar level of expertise, the preferred one will be the one who makes a better connection with the interviewer and who seems to have a great personality. And sometimes, even when one of the candidates has more expertise, the one who receives a job offer is still the folk with a more likable personality. The old adage that people do things for those they like rings true. Soft power is real power, but perhaps not enough people are ready or willing to charm their way to get leverage.

Economic inequalities and a consumerism culture might play a role in making most people hesitant to negotiate, because ultimately they feel that they don’t experience financial security. When accepting a job or trying to ask for a pay rise, people ponder whether to negotiate or not. The ones who decide to go with the flow and accept the first salary offered, might do it because they think they don’t have enough power. Also, they might be fearful or afraid that asking for more, risks making a bad impression or damaging the relationship with the employer. Nowadays many might consider themselves to have an economic disadvantage in negotiations. Percentages vary, but research suggests that up to 50% of people don’t negotiate their salaries because they feel that they don’t have enough power. Moreover, up to 95 % of individuals avoid negotiating almost 51% of the time (Hunsaker et al., 2025). If people think that they don’t have much or any leverage in negotiation, they might be avoiding negotiations altogether. An article published on the LSE website mentions that in 2022/23 in the UK, 47% of adults lived with economic insecurity. Needing the job because of financial burden is an objective economic reason that disempowers people. Experiencing economic difficulties can be very stressful and tiring and inevitably makes people think that they have fewer alternatives. But it’s not only the folks who are on lower income that struggle. At a first glance, it might look like those with very generous paychecks afford to ask for more in negotiation because they have the alternative to walk away. Maybe a less known fact is that a big proportion of the very high earners also have trouble budgeting. An article published by The Standard describes how some people living in London don’t feel financially secure on more than £100k a year, due to cost of living, taxation and lifestyle. It can come as consolation for some to know that economic insecurity is a reality for many, including for a category of individuals, called Henrys - meaning high income not rich yet, who despite their high income they don’t feel financially secure. In America, 62% of people who make over $300,000 have financial debt and live paycheck to paycheck (CNBS). Perhaps the needs and wants that people have are expanding at a higher rate than their income. It goes without saying that feeling financially secure is important for people when bargaining, because that can strengthen their negotiation position, as they have the option to walk away. But this is not the ideal or the most productive way of thinking. However, economic safety does not incentivize people to try to think outside the box and come up with solutions that satisfy all the bargaining partners.

Sometimes financial safety can have an adverse effect on the negotiation outcome because that can make people more rigid, overly demanding, entitled and so on. Every now and then newspaper readers come across articles about individuals who despite their privileged upbringing made very poor judgements in their lives and fell into disgrace. While financial security brings a feeling of psychological safety, and it gives the well-off folks the illusion of being in a somewhat advantageous position, it can also harm the negotiation outcome for all parties involved. Focusing on financial power makes people less incentivized to think creatively and problem solve to increase the pie in negotiation. When negotiation parties show only concern for money, negotiations become distributive, meaning that if someone wins, the other party losses. Other perks and interests that can be of interest, are not considered properly or even acknowledged. For example, when accepting a job offer, outside the fixed salary, other benefits and perks such as good retirement benefits, dental and health insurance, performance based commissions, career development, mentorship, flexible working hours, good work life balance etc, could and should be taken into consideration. A good employer contribution for retirement might be highly valuable. Nevertheless, the value extracted through potential high bonuses, good career progression and good employer’s contribution for the pension can by far outweigh a fixed good salary. When negotiating with other parties it’s useful to move from a discussion about money alone, because most likely every party involved has other needs and wants that, when properly considered, can increase the total value of the negotiation pie. Also, not being willing to make any concessions can be a sign of inflexibility. In a job interview the well-off folks start with a small advantage as they can feel less fearful of the negotiation outcome. They can ask for more as they know that they can walk away. But ultimately, economic power is not a source of leverage on its own, because people still need to like you and to want to do business with you.

In the situation in which people feel that they don’t have many alternatives in negotiation because of pressing financial needs, they can also gain leverage in negotiation by shifting the attention from their personal necessities to the wishes, needs and worries of their negotiation partners. How much someone needs or wants something determines the value of what is being negotiated. In this way, the leverage parties have is always dynamic because value is never purely objective. Rather value is created and negotiated in the bargaining process. Estate agents stage expensive properties to help potential customers visualise their future homes, to make them more desirable, sell faster and for a higher price. As Herb Cohen would explain in ‘You Can Negotiate Anything’, “The Worth of anything is what people are willing to pay for it”. As expected, everyone worries about fulfilling their own wishes and needs. For example, people might panic about being rejected when applying for a job or when asking for a promotion. They fail to consider that in any bargaining scenario, it is a requirement to research and analyse the needs, wants and worries of your negotiation partners. For example, reluctant bosses who don’t offer fair remuneration might feel incentivised to offer better pay packages for fear that their highly trained employees might leave to work for the competition. Depending on the industry and skills required, managers might also struggle with finding and attracting the right candidates. To gain even more leverage, job seekers can show that they have a high market value by applying and getting multiple job offers. Prospective employees can professionally and politely inform the company they prefer to work for that they have other offers. It can help them to secure a higher starting salary, a signing bonus or other benefits. Besides that, when offering a job, many bosses anticipate employees negotiating for a higher salary, therefore it’s likely that their first offer is not the best someone could get. Failure to negotiate leaves money on the table. Getting less in the first salary negotiation can have a negative effect on the potential earnings over the course of a lifetime. Starting from a lower salary can decrease the total amount of future compensation and bonuses. According to some estimates, people in the USA lost as much as $1.5 mil over the course of a lifetime because they failed to negotiate their first salary (Babcock, 2003).

Another way to gain more leverage in negotiation when having less economic capital is by showing that the rules and standards that underline the negotiation process should be fair and objective. Large and small businesses, and institutions have a set of guidelines, principles and regulations under which they operate. Some of the guidelines and regulations are written, some are not. Often, but not always, the norms and regulations are made to follow ethical principles of justice and fairness. Given this premise, dealmakers should not be treated with cruelty, coerced or taken advantage of because of their weaker bargaining position. When less powerful negotiators can successfully show that they are being treated unfairly they can restore the power balance and get a better outcome. One staggering example of unfair balance of power in negotiation was the court representation of Clarence Earl Gideon in 1961, when he was unfairly accused of robbery and he was denied an attorney. Gideon, whose biological father died when he was 3, left his home at 14, after an eight grade education and, in his own words, “accept(ed) the life of a hobo and a tramp” (letters) (Letter from Clarence earl Gideon to Abe Fortas, 1962, cited in King, 2012). He had prior felony convictions for stealing and he spent a good part of his life behind bars. However, he was innocent when he was accused of stealing $50 from a jukebox at the Bay Harbour Pool Room. While incarcerated, he studied the American legal system. He also knew that prisoners tried to file appeals citing Bets v Brady, which meant that in special circumstances such as “illiteracy”, “mental defects” and “youth”, defendants could obtain “appointed counsel”. However, Gideon’s case was different, because he was poor. His argument was that a lawyer should have been appointed for him because he was too poor to afford one and without a lawyer he would not have fair representation. He unsuccessfully asked in court to receive an attorney, but, because his crime was not a serious felony, he was denied. While in prison, he started by writing to the Florida Supreme Court, but he was denied assistance. Next, Gideon wrote a petition to the Supreme Court of the United States. The Court agreed to hear Gideon’s case, appointed him a lawyer and after an hour of deliberation Gideon was acquitted. Justice Black, writing the opinion of the court, stated that “reason and reflection requires us to recognise that in our adversary system of criminal justice, any person haled into court who is too poor to hire a lawyer, cannot be assured a fair trial unless counsel is provided for him (…) Fair trials before impartial tribunals in which ever defendant stands equal before the law, cannot be realised if the poor man charged with crime has to face his accusers without a lawyer to assist him.” Following the landmark case Gideon v Wainwright (1963) poor defendants who cannot afford a lawyer received the constitutional right to an attorney.

Appeals to the principle of fairness are not made only in the court settings but they are also employed on the global stage. The Covid 19 epidemic was a global threat that needed an united effort. However, low income economies were at a major disadvantage. It is known that during the covid epidemic, patent monopolies in the Covid 19 vaccines created global vaccines inequities (Dagovetz et al, 2025). In gaining access to Covid 19 vaccines, low-income countries did not have enough bargaining power, at least, not to start with. However, South Africa and India proposed at the World Trade Organisation that intellectual property rights related to Covid 19 vaccines be waived for at least 3 years. The proposition gained the support of over 100 states. In June 2022, all 164 members of WTO agreed to the vaccine waiver, which meant that lower income countries could produce Covid vaccines using vaccine patents, such as manufacturing processes and ingredients for 5 years, without the permission of the patent rights holder. The impact of the vaccine waver was limited because of manufacturing and logistical barriers. The pharmaceutical companies were not obligated to share the know-how: trade secrets, and the low and middle income countries lacked the expertise required for complex vaccine manufacturing. Despite its limited success, the vaccine waver was done by questioning existing standards and rules and making appeal to the universal principles of fairness and moral responsibility. “Widespread and equitable vaccine access is a moral imperative because it saves millions of lives” (Sunder & Sun, 2023).

Hopefully all the above examples showed that many times people can gain more negotiation leverage using psychological tools. While important to acknowledge, economic constraints and perceived psychological threats can be overcome. An understanding of the negotiation process, and the rules and standards of the people and institutions involved, as well as the use of psychological insights can shift the balance of power in negotiation.

Short Discussion about the Benefits & Risks of Using Leverage in Negotiation

Everyone can benefit from using psychological leverage ethically. What good is investing time and money in acquiring knowledge and skills only to not receive an excellent job offer because other applicants were better at charming their way? Several people might indiscriminately think that all the leverage techniques are deceiving. The trouble with this type of rational is that people are naturally driven to optimise their gains even when they are not fully conscious about it. When someone is the seller and another the buyer, they rarely agree what a fair price is. For example, people always overestimate the value of their properties. The value of anything is established in the bargaining process and it’s given by how much someone is willing to pay. Without the use of leverage people start negotiating from a lower bargaining position- how is that fair?

Nevertheless, less ethical negotiators might still use hard bargaining tactics to restore the power balance if they feel that the other party has too much leverage. They might employ tactics such as: ultimatums: take it or leave it, undermine the legitimacy of the other party’s claims, conceal information or use emotional manipulation by displaying anger, guilt tripping or moving the goal-post.

Some might rightfully be afraid that the use of leverage could harm a negotiation with a potentially ok-ish outcome. Ultimately, the level of risk someone undertakes is a personal decision. Leverage can multiply gains but it is inherently risky. Its improper use can damage relationships or break the negotiation altogether. For example, anchoring is a widely documented psychological technique that works by setting high demands. However, the requirements need to sit somewhat within the real realm. Negotiators need to be ready to justify exaggerated and very high asks. The opposing party might simply call out the anchoring bluff. Aggressive anchoring might lower the trust in the other party. Thus, psychological tactics can back-fire if used improperly and people sense that they are being manipulated or taken advantage of.

Using leverage in an ethical way, by showing respect and fairness, looking for mutual win-win outcomes, and building trust makes it more likely to achieve successful negotiations.

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