Georgia Bar ADR Conference – The Psychology of Negotiation and Influence

As I mentioned yesterday, this past Friday I attended the Georgia Bar’s 14th Annual ADR Institute and Neutral’s Conference. The penultimate and most interesting presentation of the day was given by Vanderbilt Law professor Chris Guthrie entitled “The Psychology of Negotiation and Influence.” Professor Guthrie’s biography describes him as “a leading scholar in the areas of dispute resolution and decision-making” with research interests in “Behavioral law and economics; dispute resolution; negotiation; mediation; [and] judicial decision making.”

His presentation (which I hope to receive shortly in PowerPoint form) discussed several key concepts with which every negotiator and mediator hopefully should be familiar: Anchoring, Exchange, and Evaluation. Like me, I would venture to guess most are familiar with these concepts, even if unfamiliar with the technical terms and descriptions.

More after the jump

The concept of “anchoring” states that a person’s estimate of value (e.g. settlement value of an injury case) is strongly biased towards the first number proposed to them, even if that value bears little relationship to the actual value of the case. I guess I was aware of this at some basic level, but was surprised how the research supports the basic premise – even in a room of over 200 mediators and lawyers. Given an identical fact pattern regarding a serious personal injury case, the group told that the plaintiff demanded “a lot” valued the case at $1.4 million on average, whereas the group told that the plaintiff demanded $10 million valued the case at $4.5 million on average.

Professor Guthrie’s takeaway? “Ask and ye shall receive.” He suggests that negotiators adopt a self-serving initial position that may be unrelated to the amount one might be willing to accept. This typically works to the buyer/plaintiff’s favor. The negotiator must be careful, however, where the value of the object of the negotiation is fairly well established (as it would be in many injury cases where a large number of similar jury verdicts or settlement amounts are public knowledge).

Exchange includes several different concepts, including reciprocity – the basic phenomenon that people feel obligated to cooperate with others or to repay others in kind – as well as reactive devaluation and self serving evaluations. I would expect that many mediators have dealt with reactive devaluation and have presented a viable settlement proposal as their own, despite the fact that it came from the opposing party.

I found the examples illustrating the self-serving bias to be the most interesting. Asked to rank our own skills in three skill sets common to mediators, 96% of us rated ourselves in top 50% of the profession in listening skills, 93% of us rated ourselves in top 50% of the profession in problem solving skills and 76% of us rated ourselves in top 50% of the profession in providing advice. Prof. Guthrie believes the last example was lower only because many mediators view themselves as strictly facilitators who refuse to provide advice or evaluation.

He also says that the cohort that most accurately describes/rates themselves in these tests are mildly clinically depressed persons. So remember that the next time someone asks you to rate yourself and you don’t think to answer “I’m in the top 5% of my profession.” You might be depressed.

Finally, evaluation explores the concepts of framing and contrast. I could probably write another page on framing and re-framing, which is a common mediator tactic, but what struck me as the most interesting was the concept of “contrast.” Even though it is wholly illogical, we alter our preferences when a new option or choice is added to the decision matrix, even if the new choice adds little or no value to the discussion. Again, the studies provided fascinating results.

In one study cited by Professor Guthrie, two groups of people were given the following pattern. You are a lawyer and you are ending your partnership. The only remaining asset left to divide is a painting worth $40,000. Group A is told that their options are: 1) Your partner keeps the painting and gives you $20k in cash; or b) you jointly sell it and split the proceeds with your partner. Group B is given both those options and a new option: 3) the partner keeps the painting and pays you $5k per year for 4 years. Choices 1 and 2 are economically identical. There may be emotional reasons not to let the partner keep the painting, but you end up with $20k at the end of the day. Faced with these choices, 36% of Group A chose Option 1. When faced with Option 3, for some reason, 70% of Group B chose Option 1.

The takeaway from this? If you have a group fixated on 2 choices and unable to decide, create a third, less attractive option. The literature seems to indicate that one party or the other will instinctively reevaluate the initial options and begin to favor one over the other.

Of course, I’ve skimmed the surface of these complex subjects, but I hope you found them as fascinating as I did. I, for one, have a lot of reading to catch up on.