The anchoring effect is a powerful psychological force in which we rely too heavily on the first information we receive. Even if we’re aware that we’re going to be influenced and biased by these anchors, it is incredibly difficult to discount them from our thought processes. In negotiations, this can put you at a serious disadvantage.
While the goal of mediation is to allow parties to resolve conflict and develop mutually beneficial solutions, it’s natural to seek an edge, an advantage that guides the conversation closer to one’s side of the issue. The anchoring effect is a powerful psychological truth that can be employed to this end. What is it, and how does it work?
While a fallen hero, Lance Armstrong perfectly describes the theory of loss aversion: “I like to win, but more than anything, I can’t stand this idea of losing.” The pleasure we derive from winning is not as great as the pain we feel from losing, so we act to minimize and avoid loss. This can impede our ability to make rational, unbiased decisions. Why? How can we start to focus on the gains?
You walk up to the blackjack table with $50 in chips. What’s the goal of your first bet? To win money. You bust, and now you’re down $50. Do you walk away or try to recoup your loss? Most people stay, and the second bet is much easier to place. Why? Because the goal changes: instead of trying to gain, you are trying to avoid loss.
How many Facebook friends do you have? 200? 500? 1,000? Now, how many “real” friends do you have? Cornell researchers found that we have an average of two confidants. Two. We run the same risk in our professional lives: email, instant messages, texts…all of this makes it easier to communicate – but also harder. Face-to-face communication is not obsolete; in fact, it is, in many ways, more important than ever.
The youngest infants are able to communicate their needs and wants – for food, for comfort, for warmth. And they do so quite effectively! Ironically, that as our ability to express ourselves increases, so too does the chance of misinterpretation and misunderstanding. The purpose of communication is to relay our message to another person clearly and unambiguously. Babies are wonderful at this; when they scream and suck at their hand, we know just what they’re “talking” about. It’s the adults that have problems; the process of communication is often muddled, interrupted, or obscured, and this can lead to conflict. It can feel like one big session of that game we played as kids – Broken Telephone.
Say you need to purchase materials for your business from a supplier; it’s an emergency – you needed these supplies yesterday, and you cannot wait for tomorrow. When you go to the supplier, he sees that you are in trouble. And seeing this, he knows he can charge you a premium for the materials. Now, what if, instead, you went to three or four suppliers who could meet your needs and budget? When the first supplier knows this, suddenly he is a lot more reasonable in his prices.
The idea of zero-sum games is that every gain is offset by loss: there is a winner and a loser. When something takes, something else has to give. This is the mindset into which many people enter negotiations: “If I win, he loses. If he wins, I lose.” But life isn’t a zero-sum game, and negotiation doesn’t have to be either. Maybe some games have to have a loser; but win-win negotiations do not.
Technically, a win-win negotiation refers not to the specific process, but the destination. Usually, these sorts of outcomes are made more likely by an “interest based” approach but this is not absolutely necessary.
Go get a gym membership for less than the advertised price. You have the power. Tell them you’re shopping around for the best price; tell them you want the initial fee or membership fee waived or the monthly fee reduced. Say no to the first offer. Everyone in that gym pays a different price; there is no reason why yours should be the highest. We can negotiate everything from car prices to cosmetic surgery. The biggest barrier for most people – the reason why they won’t dicker with the gym, the salesman, or the boss – is that they don’t know how to ask for what they want. If you can get over that barrier, you can discover an important source of negotiating power.
John Curtis, a Kingston, Ontario based mediator, teaches a class on the challenges posed when people make decisions based on their “Fast Thinking Brain”.