#66 The Negotiator’s Dilemma

Negotiator's dilemma

In the previous two blogs I presented some of the ways that one could be taken advantage of in negotiation and how to respond to them. So far I have covered tricks, power grabs, exaggeration, and possible reneging on agreements. But there is another deeper and more profound problem that affects fairness of outcomes, called the negotiator’s dilemma.

“…Central to the negotiator’s dilemma are the following two realities: understanding the other’s values [interests] is essential to devising joint gains; yet exposed values [interests] can be taken hostage.”
-Lax and Sebenius, The Manager as Negotiator

In my words: The openness and potential vulnerability required to build the understandings that lead to maximizing joint gains also enable one party to take advantage of the other and acquire a greater share of the available gains. How this happens is described below.

Having learned about one of your key interests – for example, early delivery of a service – the other negotiator (who can actually easily meet your interest of early delivery) could misleadingly say: “Since it is going to be difficult to deliver on your requested schedule, I need some concessions on price and design.”

The other negotiator has learned that you have a particular interest (early delivery) that he can offer relatively easily. But, rather than offer to meet the interest in exchange for something of equivalent value, he instead falsely inflates its value so that he can acquire more (fees and obligations) from you in exchange. In Lax and Sebenius’ language, your interest has been held hostage because you have paid an inflated price for it in negotiation.

This practice can be carried out in the relational sphere as well. This happens when someone dishonestly claims that a relationship was damaged more than it was. For example, having learned that you would like us to mend our relationship, I less than forthrightly state: “It added to my pain considerably when you stopped communicating over the accident and I would like that considered in the settlement you are offering.” In other words, “I am offering restoration of our relationship (that was not in reality hurt as much as stated) if you would just up the settlement by X dollars.”

I once watched a lawyer in mediation with the lawyer of an investment management firm use this exact tactic to gain a 20 percent higher settlement for his financially damaged client.

The possibility of your interest being held hostage is perplexing. In many situations it is impossible to know if the plea for more in exchange for the satisfaction of our interest is genuine. This is the negotiator’s dilemma from another angle. If the plea is genuine, it deserves consideration. If it is exaggerated, it deserves to be challenged. If you err on the “safe” side and treat it as inflated, but it is not, you run the risk of offending the other party and reducing what you gain. If you treat it as genuine when it is not, you run the risk of unfairly enriching the other party. Hence the negotiator’s dilemma!

Certainly, many of the practices of good negotiating reduce the likelihood of an interest being held hostage, but ultimately, your only full protection from the negotiator’s dilemma may be your no-agreement alternative (your BATNA). You may never know if you were taken advantage of or whether you responded well to the other party’s request for more, but at least you can decide that the agreement reached was the best way to meet your interests in that given situation.

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