4. What are some strategic objectives associated with negative outcomes?
In some situations the objectives sought by a negotiator can result in less than optimal outcomes. Some common examples include:
• Under-aspiring negotiator (winner’s curse) – This characterizes a situation in which a negotiator makes an offer or requests something that is immediately accepted by the opponent. The rapid acceptance indicates that the offer was below (often substantially below) what the other party expected or was willing to concede. As such, the under-aspiring negotiator fails to claim value that is ready to be conceded by the other party.
• Over-aspiring – The over-aspiring negotiator seeks more (or far more) value in the negotiation that the other party is willing to concede. Such action risks appearing unreasonably and alienating the other party.
⁃ Note: Some negotiators will setting an outcome objective that has no justification or basis. This is known as a “focus point”. Remember, a target point should be researched and realistic.
• Positional negotiator – Such a negotiator determines a set of terms desired in a negotiation, presents those terms, and refuses to budge on any dimension of any issue. This effectively makes the target point and reservation point the same. Drawing a line in the sand and an unwillingness to make concessions will often cause the other party to walk away from the negotiation. In some scenarios, the target point is outside of the other party’s reservation point. Other times it may cause the other party to perceive a procedural unfairness in the negotiation.
• Grass-is-greener negotiator (reactive devaluation) – This concerns the tendency of a negotiator to devalue an option previously considered to be attractive (or more attractive), merely as a consequence of it being offered by the counter-party. It is natural to be wary of concessions from an adversary. A good negotiator, however, realizes that concession between parties allow for the creation of integrative bargains in which value is created. As a result, all parties are better than they would have been without negotiating.
• Irrational escalating negotiator – This concerns the tendency to over extend one’s self irrationally in a negotiation. This tendency is closely related to the concept of “sunk costs”. Sunk costs are monies or other value invested that cannot be recovered. Too often a negotiator will focus on these when assessing a target or desired outcome. The expenditure of these funds has no effect on the prospective outcome in the negotiation. As such, prior expenditures should not be considered when determining whether to invest future resources or effort in a venture. This means that sunk costs should not be an influence when negotiating a potential agreement regarding the subject of these expenditures. Another related concept is the “endowment effect”. This is a propensity of individuals to pay more to retain something that they own (or believe they own). Focus on the value of the respective item subject to negotiation without regard to who enters the negotiation as owner.
• Discussion: Can you think of any other strategic objective that could potentially result in a negative outcome? Can you provide any example of how any of the above strategic objectives resulted in a negative outcome in a negotiation? Can you think of an example where pursuing one of the above strategic objectives resulted in a positive outcome?